The first quarter of 2025 has been a financially rewarding one for senior housing, according to NCREIF data as provided by NIC.
In fact, the NCREIF property sector produced the highest total return, 1.87%, in Q1 2025. That was better by 58 basis points than the Expanded National Property Index (NPI) return of 1.29%.
Senior housing also had the highest capital appreciation return of 0.54%, with the expanded NPI registering capital appreciation of 0.11%.
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There were further breakouts of data by senior housing subtype. Independent living has performed better than assisted living during the quarter in total returns (2.58% versus 1.25%) and also across the one-year (8.03% versus 3.64%, three-year (3.3% versus -0.57%), and five-year (5.13% versus 0.3%) periods. Since NCREIF started tracking subtype returns data about 10 years ago, assisted living and independent living have had similar returns, averaging 5.41% annually.
Income yield for senior housing was also positive at 1.34%. For the expanded NPI, the income yield was 1.18%.
The same relationship between the two subtypes was also clear over time in income yield, with independent living at 1.36%, over 1.33% for assisted living in Q1. For one year, the difference was 5.47% over 4.93%; for three years, 4.89% over 3.83%; and for five years, 4.53% over 3.55%. The 10-year period averaged 4.65% annually.
NIC attributed the splits between the two subtypes to higher margins. Independent living has lower costs of staffing and labor expenses than assisted living due to the nature of the residents’ needs. In addition, independent living had higher occupancy rates.
Changing demographics might explain the higher occupancy. The large baby boomer cohort is aging, with all set to hit at least 65 years of age by the end of 2029. It’s reasonable to assume that independent living is the first stage of specifically senior housing, with assisted living, and then possible variations of skilled nursing. As the cohort has been aging, independent living is likely to fill fastest.
For appreciation, senior housing saw 0.54% in Q1; the expanded NPI saw 0.11%. At one year, it was 0.48% for senior housing and -1.9% for expanded NPI. Then for three years, -3.04% versus -6.04%; at five years, -2.34% versus -0.91%; and at ten years, 1.05% versus 0.96%.
The splits between independent living and assisted living in Q1 were 1.22% and -0.07%; for one year, 2.47% versus -1.24%; at three years, -1.54% versus -4.27%; at five years, -1.36% versus -3.16%; and then at 10 years, 0.75% annually.
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