A new report from NIC MAP Vision indicates that senior housing is highly resilient, recovering quickly from both the setback it experienced during the pandemic and also from the global financial crisis 10 years earlier.
Looking back
Many of the deaths in the early days of the COVID pandemic were of people living in a long-term care facility in Washington state. This was followed by news reports of a high number of COVID deaths among nursing home residents in New York.
Given these events, it is unsurprising that people became wary of elderly people living in close proximity as the pandemic played out. This resulted in sharp drops in occupancy rates in all classes of senior housing, with the highest occupancy declines in housing for residents who needed the most care. Nursing care occupancy fell nearly 14 percentage points according to NIC MAP Vision data.
Bouncing back
The report shows that, not only did senior housing occupancy fall during the pandemic, but so did employment at senior housing facilities. At the same time, wage increases for the staff rose at a rate well above the elevated rate of inflation in late 2020 into 2021.
The high wage growth rate indicates that the staffing decline was not simply due to facilities reducing staff in line with the declining resident population. It indicates that facilities were having difficulty finding people who wanted to work there under pandemic operating conditions. However, recent wage growth is more in line with the rate of inflation as measured by the consumer price index, indicating that conditions have returned to normal.
The report shows that senior housing occupancy began to decline in Q1 2020, just as COVID arrived. The annual rate of decline grew steadily until it peaked in 1Q 2021 at about 8.5 percent. However, by Q4 2021, occupancy was growing again. Since Q1 2022, occupancy growth has been steady in the 2.5 percent to 3 percent per year range.
The report dates the start of the recovery from the availability of the vaccine. It notes that the senior housing business had largely recovered within 5 quarters of the vaccine becoming available.
GCF recovery
The report also contains data indicating that senior housing was second to only industrial real estate in producing annualized total returns in the wake of the global financial crisis. When looked at over a 10 year time span, it actually out performed industrial.
The full NIC MAP Vision report is available here.
