There is no doubt that the need for senior housing options will continue to grow as the population of older adults expands in the next few decades. About 58 million Americans have reached the age of 65. That number is expected to balloon to 82 million by 2050. While people who are 65 or older now represent about 17% of the US population, they will constitute about 23% of the population in 2050.
Many older adults hope to age in place, perhaps assisted by family or professional caregivers. Others look forward to living in retirement communities. Older adults who need help with their activities of daily living may decide that assisted-living facilities are their best option, while seniors who need around-the-clock care might need the services provided by nursing homes.
The market for housing that meets the diverse needs of older adults is growing. While the pandemic caused many seniors to delay their retirement housing plans, developers and existing housing providers are now working to keep up with an increasing demand for living environments that appeal to older adults.
Senior Housing Market Recovery
Industry analysts report a strong recovery in the senior housing market. Occupancy rates fell sharply during the pandemic but now surpass pre-pandemic levels. Filling existing units is important to the profitability of senior housing developments and thus to the supply of new senior housing. Developers are unlikely to invest in new senior housing if existing units are not earning a profit.
Investment in new senior housing projects should eventually offset the aging of existing senior housing options. About 45% of senior housing units were developed at least 25 years ago. While older units can be good choices if they have been well maintained, they may not meet the expectations of consumers who want to live in a unit that features modern design and “smart” technology, such as the ability to control temperature and lighting from a cellphone.
The slowdown in new construction during the pandemic uniformly affected independent living retirement communities and assisted-living facilities. Given the demand for senior housing and the rate at which older adults are moving into existing units, new construction may begin to explode within the next couple of years. Some large metropolitan areas are already pursuing new senior housing developments, including Denver, Miami, and San Jose.
Price Concessions
The good news for older adults who plan to buy or rent senior housing units is that the pandemic stabilized the cost of housing. Some developments began to offer price concessions to attract new residents. While the deep cuts in prices that were offered during the lean years of the pandemic may be ending, may developments continue to offer attractive prices. Seniors who are contemplating a move to a retirement or assisted-living community might benefit from doing so sooner rather than later.
Affluent seniors can benefit from an expanding market as developers continue to invest in luxury housing that returns a high profit. Seniors who can afford the cost can live in buildings that rival luxury hotels. Concierge services, fine dining, highly trained caregivers, and “curated senior living experiences” attract older adults who have achieved a level of success but no longer want to deal with the headaches of home maintenance.
Older adults in search of affordable housing will need to depend on property owners and developers that combine technology with efficiency to produce sustainable rents and management fees that seniors of ordinary means can pay. As the supply of senior housing options grows to meet demand, competition will likely encourage housing providers to offer more “deals” to senior renters and buyers, at least in the short term.