1

The seniors housing industry’s recovery continued in 2023, but the rate of improvement slowed relative to the strong 

rebound in 2022. According to NIC MAP Data, Powered by NIC MAP Vision LLC, rent growth rates slowed marginally during 

the year after reaching record highs in 2022, though they remained quite high compared to pre-pandemic performance. 

Absorption throughout the year remained above pre-pandemic levels and occupancy again increased, albeit modestly.

Improvement in the seniors housing sector slowed in 2023from the record rent increases it reported in 2021 and 2022, 

though it continued to experience strong absorption throughout the year. The sector continued to achieved new records 

for the total number of units occupied each quarter in 2023, though occupancy improvements slowed relative to 2022. 

Higher financing costs and persistently higher staffing costs continued to cause financial stress for many individual 

properties in the sector, and there remains a small segment of properties that are yet to experience a post-pandemic 

recovery. The industry may face some headwinds through the remainder of 2024 with the economy expected to slow, but 

a continued expansion is still expected after short-term volatility subsides, driven by the enormous wave of aging baby 

boomers.

Multifamily Economic and Market Commentary

MARCH 2024

Seniors Housing Sector Recovery Slowed, Though Demand Remained Strong in 2023

Rental Market Fundamentals

Annual rent growth slowed modestly in 2023 

according to NIC MAP, slowing by 0.3 

percentage points from the prior year to a 

still-strong 5.0% for the year. The underlying 

segment trends remained similar, with both 

types slowing just as modestly: Majority 

Independent Living (IL) decreased by 0.4 

percentage points from the prior year to 

4.4%, and Majority Assisted Living (AL) 

decreased by 0.2 percentage points to 5.7%. 

Overall, seniors housing absorption 

decreased in 2023, after hitting a record level 

in 2022, declining to 24,658 units, down 

10.1% from 27,441 units in 2022. The 

underlying segments saw similar trends for 

the year, though to different degrees: 

Majority IL decreased 15.6% from the prior 

quarter to 9,994 units, while Majority AL 

absorption decreased 6.0% compared to 

2022 to 14,664 units. However, in any other 

year, these levels would have been new 

records.

Occupancy levels continued to steadily 

increase through 2023, though it remained 

below pre-pandemic levels. Occupancy rose 

to 85.1% at the end of 2023, improving 2.3 

percentage points from 2022. Underlying 

trends were similar for the year: Majority IL 

increased 1.8% to 86.8%, and Majority AL 

increased 3.0% to 83.4%.

70%

80%

90%

Occupancy Levels by Property Type – Q4 2023

Seniors Housing Majority Independent Living Majority Assisted Living

0%

2%

4%

6%

Year over Year Rent Growth by Property Type – Q4 2023

Seniors Housing Majority Independent Living Majority Assisted Living

-10,000

-5,000

0

5,000

10,000

Quarterly Absorption by Property Type – Q4 2023

Majority Independent Living Majority Assisted Living

Source: Primary Markets, NIC MAP Data, Powered by NIC MAP Vision LLC
2

Multifamily Economic and Market Commentary

The number of units under construction 

further declined throughout 2023 

according to NIC MAP, decreasing to 30,441 

units at year end. The total number of units 

under construction was down 14.5% from 

2022. Both segments decreased, with the 

scale of the decline converging: The AL 

units under construction were down 15.3% 

compared to 2022, while IL units were 

down 13.6%. The overall number of units 

added to seniors housing inventory in 2023 

decreased modestly to 9,552 units, down 

13.8% from 11,078 units added in the prior 

year. 

0

10,000

20,000

30,000

40,000

50,000

60,000

Units Under Construction by Property Type – Q4 2023

Majority Independent Living Majority Assisted Living Seniors Housing

Transaction Activity

Due to limited transaction data and a small number of cap rates being disclosed, a 2023 year-end annual average 

cap rate was unavailable. According to NIC MAP data for second quarter 2023, the annual cap rate over the prior 

year ending in the second quarter was 6.5%, which is an increase from 6.0% for full-year 2022 and is more in line 

with what we anecdotally believe to be current market trends. 

Total 2023 seniors housing property sales volume (preliminary) decreased to its lowest level since 2009 at just 

$3.8 billion, according to NIC MAP, down from $6.5 billion 2022 and $11.9 billion in 2021. The 2023 sales 

transactions involved 408 properties, which was up from 389 in 2022. The average transaction price per unit 

during 2023 declined to $111,868, down 38% from 2022.

Buyer composition for seniors housing transactions continued to be dominated by private entities in 2023, 

according to NIC MAP, with their share at 71.0% of transactions, up from 67.4% for 2022. Institutional buyers 

increased to 25.4% in 2023, compared to 19.8% in 2022. Cross-border buyers did not account for any of the 

activity, and public entities accounted for 3.6%. 

Source: NIC MAP Primary Markets

4%

5%

6%

7%

8%

9%

10%

Four Quarter Cap Rate/Yield – Q4 2023

$0

$1

$2

$3

$4

$5

$6

$7

$8

Billions

Sales Volume – Q4 2023

Source: NIC MAP
According to data from Moody’s Analytics CRE, majority AL conditions further recovered for most of the nation’s 

larger inventory AL metros. For the second consecutive year, all metros had positive rent growth in 2023. Boise, 

Fort Myers, Las Vegas, and Orlando were again rent growth leaders, as they were in 2021 and 2022, with Columbia, 

SC, joining them in 2023 While Scranton, Chicago, Long Island, and Baltimore lagged the market from a rent 

growth perspective, each showed higher growth than in 2022, as seen in the chart below. Only Melbourne, FL, had 

a deceleration.

From a vacancy perspective, 79 of the 83 largest markets in the country experienced a decrease in vacancy rates in 

2023, according to Moody’s Analytics CRE. And all of the metros among the five highest and lowest vacancy rates 

in 2023 saw a decline compared to 2023, as seen in the chart below. San Francisco, Hartford, Miami, and Omaha 

were again among the five lowest vacancy rate markets for AL properties, with Boise joining them in 2023. 

Appleton, WI, Columbia, SC, and Daytona, FL, were among the higher vacancy rate markets in 2022 and 2023, with 

San Antonio and Oklahoma City joining them this year.

3

Multifamily Economic and Market Commentary

Market Performance

Occupancy levels in NIC MAP’s secondary markets (32nd to 100th in size) increased to 87.0% at the end of 2023, a 

2.3 percentage points increase from the end of 2022. While annual rent growth in the primary markets declined in 

2023, annual rent growth in the secondary markets accelerated, increasing to 5.2%, up from 4.9% for 2022. 

77%

79%

81%

83%

85%

87%

89%

91%

93%

Occupancy - Primary vs. Secondary – Q4 2023

Primary Markets Secondary Markets

Source: NIC MAP

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Rent Growth - Primary vs. Secondary – Q4 2023

Primary Markets Secondary Markets

0%

5%

10%

15%

20%

25%

30%

Select Metro AL Vacancy – 2019-2023

2019 2020 2021 2022 2023

-2%

0%

2%

4%

6%

8%

10%

Select Metro AL Rent Growth – 2019-2023

2019 2020 2021 2022 2023

Metro-Level Assisted Living Performance Further Recovers

Source: Moody’s Analytics CRE – select metros include areas with > 1,500 AL units in market
4

Multifamily Economic and Market Commentary

Outlook

Short Term: The seniors housing recovery continued in 2023, though as the year progressed rent growth slowed 

from its recent record-breaking and unsustainable pace, and rent growth rates remained well above prepandemic levels. The total number of occupied units reached new record highs each quarter of the year and a 

modest slowdown in new unit deliveries allowed for the improvement in occupancy to persist throughout the 

year. The sector continued to see individual properties adjust to higher operating and financing costs, and a 

segment of older properties are yet to experience the sector-wide recovery. We believe that conditions in the 

seniors housing sector remain favorable for growth, given the continued robust absorption rates, the decline in 

the level of new construction underway, a slowdown in deliveries, and recent rent growth trends remain favorable 

conditions for investors, owners, and operators. However, elevated home prices and higher mortgage rates could 

be a headwind for the sector over the next year if those seniors who plan to sell their homes to free up funds for a 

transition into seniors housing have difficulty doing so.

Long Term: We believe the burgeoning population of people entering their 80s remains an underlying engine of 

the sector’s future growth prospects, though it is still several years before the industry is likely to begin 

experiencing the full strength of the surge. We continue to believe that the sector is undergoing an established 

fundamentals recovery, and it could soon be entering some of its strongest periods of growth in terms of demand. 

Still, it must navigate the next few years of potential economic volatility before a long-term industry expansion is 

firmly entrenched.

Metro-Level Independent Living Performance Improves

-4%

-2%

0%

2%

4%

6%

8%

10%

Select Metro IL Rent Growth – 2019-2023

2019 2020 2021 2022 2023

Source: Moody’s Analytics CRE – select metros include areas with > 1,500 IL units in market

0%

5%

10%

15%

20%

25%

30%

Select Metro IL Vacancy – 2019-2023

2019 2020 2021 2022 2023

Majority IL rent growth rates in 2023 increased in 80 of the nation’s 88 highest inventory IL metros, according to 

data from Moody’s Analytics CRE, which is a slight increase from 2022, when 16 of the largest markets slowed, 

though all had positive rent growth. Des Moines reported the highest IL rent growth rate in 2023. Orlando and Fort 

Myers remained among the top five for the second consecutive year. Greenville, SC, and Naples, FL, were the other 

Majority IL rent growth leaders, with each reporting substantial growth over 2023. Among the slower rent growth 

metros, all reported a higher rate of rent growth compared to 2022.

Majority IL vacancy decreased in 82 of the 88 largest markets in the country, though the lagging markets shown in 

the chart below continued to have a remarkably high level of vacancy of over 15%. Richmond and Baltimore 

continued to be among the tightest vacancy markets with northern New Jersey, Minneapolis, and suburban 

Virginia joining them this year. Among the markets with the highest IL vacancy rates, Fairfield, CT, and Louisville 

reported a decline in vacancy compared to 2022, but Cleveland, Miami, and Greenville, SC, each reported 

increases in vacancy for 2023.
Multifamily Economic and Market Commentary

5

Tim Komosa

Senior Manager, Multifamily Economics and Strategic Research

Multifamily Economics and Strategic Research

March 2024

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economic and Strategic Research (ESR) Group included in 

these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number 

of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. 

Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it 

does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. 

Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, 

opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date 

indicated and do not necessarily represent the views of Fannie Mae or its management.

© 2024 Fannie Mae