The oldest baby boomers are poised to turn 80 years old this year, which could bring the market of dedicated senior housing from a place of oversupply to a shortage. This is according to a report published this week by the Wall Street Journal.
The projected aging of the U.S. population shows that by 2030, the 80-plus population is expected to increase by 4 million people to a total of 18.8 million nationwide. That age is often seen as a milestone by which a person cannot live safely or comfortably in more general-service dwellings, necessitating some kind of specialization tailored to the natural physical impairments that come with age.
Despite that projected need for more senior housing, however, development on dedicated senior housing units and facilities ground to a halt during the COVID-19 pandemic and has largely stood still since then, the report explained.
“The sector is expected to move from its former glut to a shortage in the next five years,” the Journal reported. “More than 560,000 new units are needed to meet all the demand by 2030, but only 191,000 will be added at current development rates, according to data service NIC MAP.”
A renewed interest in the senior housing market could also spur higher prices and waitlists, two things that lower-income older Americans can ill afford. Adding to the potential shortage in years ahead are stubbornly high mortgage rates and tariffs that could slow new construction.
Occupancy rates and rents at senior housing facilities have largely returned to their prepandemic levels, signaling a recovery in the wider industry. That could be challenged, however, by developer doubt about the industry’s prospects and the fact that as many as half of U.S. seniors cannot afford private senior housing communities.
The wealth of the baby boomer generation as a whole slightly offsets this, since “many have paid off mortgages on homes that have soared in value,” and more than “40% could afford senior housing from income alone,” the report explained, citing data from real estate analytics company Green Street. But complicating things further is an increasing desire among older Americans to age in place in their own homes and communities.
“[A]bout 35% of seniors who could afford senior housing opt not to use it,” the firm’s data suggests. This is because they “prefer to age at home closer to friends and family, something that is being made increasingly possible by advances in design and technology.”
