Senior Housing Demand to Surge Over Next 5 Years
Market forces, demographic changes and an expanding senior population will radically shift the senior housing industry over the next several years, according to a report from Marcus & Millichap.
The U.S. population of those age 75 and older will grow by 5 million people over the next five years, adding a 21 percent increase to the number of prospective senior housing residents, according to Marcus & Millichap’s First Half 2019 National Seniors Housing Report.
(Read also: A recent study from the National Investment Center for Seniors Housing & Care reported that 54 percent of middle-income seniors in the U.S. will be unable to pay for assisted living and out-of-pocket medical costs by 2029.)
Along with the population growth, a slowdown in senior housing construction due to tighter lending and rising construction costs as well as rising healthcare costs will fuel more demand for senior housing. After interest rake hikes in late 2018 led to lower investment volume in senior housing in the first quarter of 2019, investors are expecting interest rates to stabilize going forward.
Other highlights of note in the report include economic trends impacting the senior housing sector, such as the number of seniors taking advantage of higher home prices and selling their homes to add more equity to their retirement funds. Baby boomers, who in addition to having more wealth than their parents did, are also experiencing longer lifespans than previous generations, with the average 65-year-old man expected to live to 83 years old and a significant share to reach 90 years old, according to the report. The longer lifespans are expected to boost the population of seniors aged 75 and older by more than 10 million over the next decade.