A new report from NIC MAP Vision, Senior Housing Market Outlook, is bullish on the senior housing market, pointing to its resiliency in the wake of multiple crises, its rapid recovery, and an extraordinary level of demand arising from the aging population.
“The senior housing market is transitioning from one of its most challenging eras to potentially its most prosperous,” says Arick Morton, CEO of NIC MAP Vision. “Despite crises that tested the industry to near breaking points, demand is rebounding significantly, with occupancy rates climbing as supply lags.”
“This reflects a notable resilience in the sector and underscores a ‘generational opportunity’ to serve the aging population effectively,” says Morton.
NIC MAP Vision is the senior housing industry’s leading provider of data and analytics and the official Data and Insights Partner of Argentum.
Affordability
Among the report’s many insights is a prominent focus on affordability. It examines median senior household income and net worth, the sources most seniors tap to pay for senior housing, finding that today’s seniors are better equipped than prior generations to afford Senior Living care.
“The affordability improvements among seniors bode well for senior living operators, providing a unique chance to capitalize on the growing demand. With more seniors in a better position to afford care, there’s potential for increased penetration rates if affordability has indeed been a limiting factor in the past. This shift also gives operators some breathing room to recoup margins lost to inflation, allowing for a more sustainable financial model,” Morton observes.
Over the last decade, seniors’ income and net worth have increased far more than senior housing rent prices, according to the report. Both household median income and net worth increased by 35% for 75+ households from 2013 to 2022. In the same period, senior housing rents rose by just 7.8% in primary markets. This all combines to give 75+ seniors an all-time high number of spend-down years (53.2).
In addition to this, the report reveals that the most affluent groups of seniors will grow fastest. The proportion of highest-income 75+ households, those with incomes of $100k+ and $200k+, will grow at a rate roughly two-times that of the overall 75+ population. Those with incomes of $35k+ and $50k+ will grow 1.4- and 1.6-times, respectively, faster than the 75+ population as a whole.
“While affordability challenges persist for some, the overall trend suggests that a larger share of the senior population can now more comfortably access senior housing options than ever before,” says Morton.
Capacity Gap
The NIC MAP Vision report also serves as a stark warning: There simply aren’t enough senior housing units to satisfy the “silver tsunami” demand. Its analysis of senior housing supply and development shows a wide gap in need versus capacity.
“The significant capacity gap in the senior housing market stems from the ‘polycrisis’ that unfolded between 2020 and 2024. This period was characterized by multiple overlapping challenges, notably high interest rates that severely impacted development capacity. As a result, many developers either exited the market or substantially reduced their activities,” says Morton.
The wave of aging baby boomers will begin to crest in the late 2020s, yet supply is already falling behind growth in the 80+ population. By 2030, the report warns, demand will outpace supply by approximately 275 billion individual units at the current pace of senior housing development.
The report observes that an investment of “historic proportions” is needed to match demand. Inventory growth is currently at near-record lows, 26k units per year. To maintain a 90% occupancy rate, this investment needs to be at least two-times the historical maximum development pace of 56k units per year. The needed development investment is estimated to be more than $1 trillion by the early 2040s.
“If this gap isn’t closed in time and supply fails to keep pace with the growing demand, affordability will indeed suffer. Our prospective residents may face higher costs and struggle to access the care they need. It’s imperative for the industry to increase its capacity to meet the forthcoming demand surge, ensuring that senior housing remains both accessible and affordable,” Morton urges.
Further Reading
The Senior Housing Market Outlook report covers key trends, including:
- Surging fundamentals driven by demographic, economic and sectoral patterns;
- Investment activity, which presents challenges and opportunities to stakeholders; and
- Bright prospects for the senior housing sector across near-, medium-, and long-term horizons.
For a full analysis, download the NIC MAP Vision report, Senior Housing Market Outlook.
