What happened

The U.S. stock market was having one of its best days ever on Monday, fueled by extremely positive COVID-19 vaccine data from Pfizer's (NYSE:PFE) late-stage clinical trials. The Dow Jones Industrial Average opened at an all-time high and remained more than 1,000 points higher as of 11:15 a.m. EST. The S&P 500 was higher by 2.7%, and most other major market averages were well into the green.

While pharmaceutical stocks are making the headlines, it's healthcare real estate stocks that are among the market's best performers. Welltower (NYSE:WELL), the largest healthcare real estate investment trust (REIT ), was up by 17% on the day. And the other two in the "big three" -- Ventas (NYSE:VTR) and Healthpeak Properties (NYSE:PEAK) -- were higher by 19% and 7%, respectively.

Healthcare professional assisting senior male patient.

Image source: Getty Images.

So what

While the U.S. economy is well-positioned to broadly benefit from the availability of a safe and effective COVID-19 vaccine (like Pfizer's appears to be), one area that's really set to benefit is senior housing. In simple terms, people are scared to let their relatives live in assisted-living facilities, nursing homes, and other types of senior housing. And it's not hard to see why.

Just to use one of these companies as an example, out of the 422 SHOP (senior housing operating partnership) properties in Ventas' portfolio, 269 had confirmed COVID-19 cases as of Oct. 31. When the pandemic worsened, move-ins ground to a near halt (24% of prior-year levels in April), and move-outs soared (112% of 2019 level in April).

In Welltower's case, senior housing month-end occupancy has plunged from nearly 86% in February to 78% in October, and move-in activity is still down 39% year over year. Healthpeak's senior housing properties are exhibiting similar trends.

Also, notice that Welltower's and Ventas' stock prices are going through the roof today, while Healthpeak's move has been relatively mild. This is because these two companies are highly dependent on senior housing and related properties -- more than half of Ventas' net operating income (NOI) comes from senior housing and skilled nursing, and for Welltower the concentration is even greater (69%). Meanwhile, Healthpeak is more diversified, with only about one-third of NOI coming from senior housing.

Now what

The demographic trends in the United States clearly favor long-tailed senior housing demand growth. The 80-and-older population is expected to roughly double over the next 15 years alone. But there's been a big question mark surrounding the COVID-19 pandemic and how much senior housing demand could possibly pick up before a vaccine becomes available.

Now that we've received a bit more clarity on the effectiveness and timetable of a safe vaccine, investors seem to be feeling more optimistic.