The 4 KPIs That Reveal Senior Housing as Recession-Resilient
Senior living occupancy proved to be recession-resilient in 2008 and 2009, setting a strong precedent for the industry. Over the years leading up to the COVID-19 pandemic, senior housing saw a significant increase in nominal spending. As occupancy levels return to normal post-pandemic, the industry’s stability is once again evident.
Josh Walker, Vice President of Investments for Inspired Healthcare Capital (IHC), notes that the need-driven nature of the senior living industry has contributed to its ability to thrive, even in challenging economic times. Despite the anticipation of the Baby Boomer “silver tsunami,” senior housing has remained strong.
KPI #1: Supply and Demand Inefficiency
The growing 80+ population is projected to create a significant demand for senior housing in the coming years, with inventory growth not keeping pace. This imbalance, along with seniors’ ability to pay for housing through various means, contributes to the industry’s durability.
According to Walker, the market’s high-rate environment and limited new development have further strengthened senior housing’s position in the face of growing demand.
KPI #2: Occupancy
Senior housing occupancy has rebounded consistently since the pandemic, with occupancy rates approaching pre-pandemic levels in various market segments. This resilience showcases the industry’s ability to withstand economic challenges.
KPI #3: Cap Rates
Senior housing’s needs-driven nature and essential services have resulted in stable cap rates, allowing for necessary rent adjustments in the face of inflation. This consistency indicates the industry’s resilience in fluctuating economic conditions.
KPI #4: NOI Growth
Recent examples, such as IHC’s successful portfolio management despite external challenges, highlight the industry’s potential for strong NOI growth. This performance underscores the long-term durability of senior housing investments.
As an essential service catering to the needs of an aging population, senior housing remains a reliable investment option. The industry’s ability to adapt to changing economic conditions and meet the demands of seniors highlights its recession-resilient nature.
Learn more about senior housing investment opportunities at ihcfunds.com.
* Data Source: NIC Map Vision, Dec. 2023
** Source: “Senior Housing Demand Outpaces New Supply in 3Q24”
