2025 could be the year that brings positive momentum for not only prospective senior living residents, but also senior living community owners and operators, according to one senior living marketing expert.
Rate integrity in senior living communities remains strong, thanks to a movement in the industry toward transparency, according to Bild & Co. CEO Jennifer Saxman. From more than 280 individual marketing surveys of senior living communities conducted in the third quarter, Bild & Co. found that with information readily available — and more educated consumers — rate transparency worked in their favor, according to a November white paper.
Saxman told McKnight’s Senior Living that she anticipates seeing much more consistent rate increases into 2025, hovering between 6% and 8%, rather than the double-digit increases seen coming out of the COVID-19 pandemic. And she said the days of 3% to 5% rate increases are gone.
The average rate increase was 3.93% in 2022, she noted, and it rose to 4.02% in 2023. Rates in the third quarter increased an average of 5.01%, a 1.01% increase compared with all of 2023, and a 0.4% increase over the second quarter of this year. The highest rate increase Bild saw in the third quarter was 10%, and the lowest was 1%.
And although concessions are down, Saxman said that operators are pulling more tools from their toolboxes to attract prospective residents. Price negotiations are becoming more commonplace, particularly when a prospective resident has narrowed the choice to two communities, she said.
The waiving of community fees is becoming a less popular tool in that toolbox, however, with negotiations focusing on base rents, Saxman said.
Waiving or reducing community fees also declined to 10% of communities in the third quarter, down from 11% in the second quarter. According to Bild’s survey, 10% of communities offered to waive or reduce their community fees — most commonly a reduction of 50% to 75% — whereas 51% of communities reported offering no specials due to high or full occupancy.
The average 2023 community fee, $2,899, was higher than the 2022 average, $2,551. Although the first-quarter average community fee was $4,152, the amount fell to $3,582 in the second quarter, increasing to $3,830 in the third quarter.
Bild, which recently celebrated its 25th anniversary with a rebranding and new website, also found that move-in specials are declining. Only 51% of communities reported offering move-in specials in the third quarter, compared with 57% in the second quarter and 63% in the first quarter.
Referral site triggers change
Saxman said the shift in concessions not only is the result of higher occupancy, but also a change in A Place for Mom’s pricing structure. She said the industry became so dependent on the company for leads that the referral site now can name its price.
“We’ve become so dependent on A Place for Mom for not only leads but actual move-ins,” Saxman said. “You have to have another option.”
Although the full ramifications of A Place for Mom’s price increases remain to be seen, she has heard that many senior living companies are funneling their marketing dollars toward obtaining more organic leads locally.
“That bubble [regarding A Place for Mom’s pricing increases] has to burst at some point, and we’re nearing it,” Saxman said, adding that senior living companies cannot afford to pay all of the additional fees. “Someone is going to crack the code.”
Organic, grassroots marketing, she said, requires knowing the people in a given market and using word of mouth for promotion, which always has been the industry’s No. 1 referral source. The industry is ready for a change, Saxman said, adding that for 2025, she sees that change being more positive not only for clients but also for operators and owners as well.
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