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Insights Article | September 26, 2022

Seniors Housing Resiliency Prompts Renewed Investor Demand


Despite industry disruptions driven by the pandemic, seniors housing has picked up steam and is showing steady growth as it emerges from a challenging few years. And it’s drawing attention from investors.

A Model of Resiliency

Historically speaking, the seniors housing sector—specifically assisted living facilities—has been extremely resilient through various economic and other challenges, such as the COVID-19 pandemic. In fact, during the last four recessions healthcare has been one of two sectors of the stock market to average positive gains, according to Forbes. In particular, seniors housing has developed a reputation for being recession-resistant, especially through the Great Recession.

Well-operated seniors housing properties rebounded rather quickly following the early days of COVID-19 and saw a boost in new resident activity in the fourth quarter of 2020 and the first quarter of 2021. 2022 is no exception, with continued forward momentum after two difficult years.

Long-Term Positive Outlook

In recent months, seniors housing occupancy has rallied from all-time lows, indicating that the need and demand for seniors housing remains solid. The National Investment Center for Senior Housing and Care (NIC) reports that occupancy climbed for the fourth consecutive quarter, reaching 81.4% occupancy in the second quarter of 2022, up from a pandemic low of 78.8% occupancy in 2020. While there is still a way to go to reach pre-pandemic occupancy levels of 87.6%, these numbers show a promising outlook.

Transaction volume is edging toward pre-pandemic levels as well, as investors seek out alternative investments to hedge against market volatility. As interest rates rise and inflation persists, investors are eyeing alternatives to diversify their portfolio and are looking to increase exposure in assets that show growth opportunity and resiliency, making seniors housing an appealing choice. 

At the end of 2021, the average seniors housing price per unit was up 9% to $160,000, nearing its pre-pandemic average of $180,000, according to Seniors Housing & Care Investor Survey and Trends Outlook from JLL Valuation Advisory. Average cap rates remained stable at 6.4% from Q2 through Q4 2021 and are anticipated to remain steady throughout the remainder of the year, though some analysts project a slight uptick in basis points over the next 12 months. 

Baby Boomers Fuel Demand

While the industry is making strides to bounce back from obstacles linked to the pandemic and untangle ongoing staffing and operational challenges, the aging baby boomer demographics and government funding fuels heightened demand in the industry. The need for seniors housing continues to outweigh supply, which is driving occupancy upward. According to the Census Bureau, the wave of baby boomers aged 57-75 is now estimated at about 73 million strong, or 22% of the population.

This demographic shift presents an opportunity for investors who want to invest in real estate without having to manage property or be tied to the stock or bond markets. Further, investors benefit from a diversified fund across multiple asset classes and geographic locations through a single investment.

As Americans live longer, more active lives, the range of seniors housing asset classes continues to grow. From age-restricted communities to assisted living facilities, the industry is expanding its mix of real estate offerings to better complement lifestyle preferences and care services.

The sector has started to prepare for this renewed demand with a focus on attracting residents by aligning with their interests, needs, and expectations. These include health and wellness programs, new amenities (such as salons, aquatic centers, and spas), recreation options, and technology-enabled services.  

Portfolios with a Purpose

For investors seeking portfolios with a purpose and investments in people, the positive social impacts of providing capital to the sector are seen through the delivery of better facilities, healthcare, and services to elderly residents to improve and extend the quality of their life in their later years.

The seniors housing sector’s unique resiliency and demographic tailwinds favorably positions this asset class as a high-performing, long-term alternative investment option.

To learn more about Wilshire’s investment opportunities, click here or call (866) 575-5070 to speak with an investment advisor.

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Don Pelgrim

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