The Future Business is Assisted Living!
Senior living, an industry often perceived as grappling with oversupply in certain markets, is poised for a significant shift. As the baby boomer generation continues to age, the demand for senior housing is expected to surge, presenting a lucrative opportunity for entrepreneurs and investors. Recent analysis from the National Investment Center for Seniors Housing & Care (NIC) sheds light on this impending demand and the necessity for increased supply to accommodate it.
According to NIC’s estimates, based on an 18% penetration rate among the 80-plus household cohort, nearly 986,000 new units will be needed in the senior living sector between now and 2040. This projection underscores the magnitude of the demand awaiting fulfillment. Furthermore, with an aging population, the average age of residents in senior housing has increased over the past decade, emphasizing the urgency of addressing this demographic shift.
The immediate need is striking. NIC’s analysis indicates that 31,000 units were needed in 2019, 36,000 in 2020, and 41,000 in 2021. Although fewer units were added to inventory in 2018, the gap between demand and supply remains significant. To date, the industry has added an estimated 48,000 new units in 2019, indicating a step in the right direction but highlighting the ongoing necessity for expansion.
However, it’s crucial to acknowledge potential variations in penetration rates. NIC’s analysis notes that if the penetration rate were to increase to 23%, an additional 247,000 units would be required through 2030 to meet demand. This variability underscores the complexity of forecasting in this dynamic industry, especially considering the unique consumer preferences of the baby boomer generation.
Understanding these preferences is key to capitalizing on the evolving landscape of senior housing. Baby boomers are known for their distinct approach to lifestyle choices, and their preferences are expected to shape the future of senior living. Active adult and age-restricted senior housing, for instance, have gained traction among this demographic. JLL’s 2019 Seniors Housing Survey highlights the emergence of senior-only apartments as a standalone product type, catering to the preferences of this demographic segment.
JLL’s survey estimates that between 5% and 8% of baby boomers, potentially up to 6 million individuals, are expected to transition to senior apartments over the next decade. This shift in housing preferences, coupled with the 10-year differential in the average age of entry compared to independent living, underscores the viability of senior apartments as a distinct product type within the industry.
Even at a conservative penetration rate of 13%, NIC estimates a need for 638,000 new units through 2030 to meet demand. This demand-driven growth trajectory positions assisted living facilities as a promising business opportunity for the future. Entrepreneurs and investors who recognize the evolving needs and preferences of the aging population stand to benefit from tapping into this burgeoning market.
In conclusion, the data speaks for itself: the demand for senior housing is on the rise, driven by demographic shifts and evolving consumer preferences. As the baby boomer generation continues to age, the need for assisted living facilities and other senior housing options will only intensify. By understanding and responding to these trends, entrepreneurs can position themselves at the forefront of an industry poised for substantial growth in the years to come.
Courses
Learn from SSM Advisory Founder and Assisted Living Expert, Kwame Tanner through on demand video courses to acquire the knowledge and insights you need to confidently navigate licensing, setting up and operating a successful assisted living facility. With over 15 years of experience, Kwame provide in-depth and to-the-point insights to help you start your journey.
These courses are mid-level investment for individuals who need minimal guidance and support to take the next step in their journey of starting their senior care business.
—
This blog post combines information from the National Investment Center for Seniors Housing & Care (NIC) analysis and insights from JLL’s 2019 Seniors Housing Survey to illustrate the growing demand for assisted living facilities and senior housing in the future.