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CONTRIBUTORS

Indraneel Karlekar

Managing Director
Global Head of Research and Strategy

Jeremiah Lee

Senior Vice President
Research Officer

Executive summary

Sustained demand from an aging population and interest from institutional investors is likely to lead to above-average outcomes for the senior housing sector in the current cycle. A positive outlook is supported by the following secular trends: 

  • The massive Baby Boomer population is reaching an age when living decisions are made for assistance with everyday tasks and higher levels of medical care;
  • The senior population is more financially secure than previous generations;
  • Shifting family dynamics and geographic dispersal promote demand for third-party care;
  • Demonstrated resilience through economic cycles 

Senior housing facilities provide healthcare and hospitality services to aging households and are segmented based on resident medical acuity levels and the required level of care: independent living, assisted living, and memory care. The average age of senior housing residents is early-to-mid 80s. While demand for independent care is more discretionary and strongly influenced by the health of the broader economy and housing market, demand for assisted living and memory care is typically event-driven (e.g. physical fall, declining memory, poor diet/health), resulting in the need for assistance with “activities of daily living” (ADLs). While several states offer Medicaid waiver programs that help to offset the cost of support services, Medicaid does not cover the cost of room and board at senior housing facilities. As such, senior housing is privately funded. Consequently, the population growth and health (both financial and physical) of older age cohorts and their adult children are key determinants of demand.

Against a backdrop of a compelling demographic tailwind and a muted, near-term supply outlook, senior housing market fundamentals are expected to remain healthy going forward. This favorable outlook is bolstered by stabilizing operating costs supported by improving labor availability and the continued adoption of innovative, patient-care technologies. The sector’s recovery following a turbulent period in the immediate aftermath of COVID has generated an attractive entry point for investors. With all signs pointing to an influx of new investment into the sector, we believe senior housing is expected to continue improving.

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