Independent Living Rate Growth Bounces Back Following Mid-2024 Declines

Independent living operators picked up the pace of resident rent growth in the third quarter of 2024 after a period of deceleration earlier in the year.

independent living initial rates were 12.2% higher in September, 2024 than in the same period one year prior, according to a new analysis from the National Investment Center for Seniors Housing and Care (NIC). That represents a “sharp rebound” from June, when independent living resident rates were slightly lower than in the previous year. Additionally, in-place rates grew 9.8% and asking rates grew 8.9% compared with the year prior.

Independent living properties also “experienced a notable decline in discounting” during that period, according to NIC. Initial rates in September 2024 were around $319 below asking rates, making for the lowest level of discounting seen in NIC’s data since February 2023.

Assisted living initial resident rates grew 3.7% September 2024 compared to the same period in 2023, representing a gain from a 2.4% increase in June 2024. Assisted living asking resident rates registered at a growth rate of 6.1% in September, down from 6.4% in June.

Overall, assisted living discounts registered $703 below asking rates as of July 2024, representing the highest level of discounting since “at least 2019,” according to NIC.

According to the report’s author and NIC Senior Principal Omar Zahraoui, independent living operators will continue to steadily grow resident rates in 2025. 

“While the acceleration in growth has likely peaked, we expect a steady pace through the fourth quarter of 2024 and some moderation in the pace of growth in 2025,” Zahraoui said. 

He added: “For assisted living properties, discounting pressures will likely persist, with more tempered rent growth as operators balance affordability and demand in an increasingly competitive market.”

However, rent growth is a “double edged sword” for the industry, he noted.

“While rising rents have supported operating margins amid higher expenses, affordability challenges for middle-income older adults persist,” Zahraoui said. “Luxury senior housing properties may have successfully justified premium rents with high-end amenities and services, but mid-tier and lower-tier operators will likely need to balance pricing and discount strategies with occupancy to remain competitive.”

Move-ins are still remaining at a higher rate compared to move-outs for both independent living and assisted living properties, though move-ins for independent living properties saw a slight decrease from 2.9% in June to 2.4% in September. Meanwhile, assisted living properties remained at a “strong” 3.4% in July 2024, 3.3% in August, and 3.1% in September 2024.

Due to the strong demand the industry is seeing and low new construction rates, Zaharoui said this trend is expected to continue into 2025.

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