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Senior Housing Investors
Boomers Turn 80: Why Your Grandma Can’t Find an Apartment - A Deep Dive
The Perfect Storm in Senior Housing Has Arrived.
In 2025, demand for senior housing is exploding as baby boomers begin turning 80—the critical age when care decisions accelerate. Annual absorption has surpassed 35,000 units for three consecutive years, pushing occupancy rates toward 90%. But there’s a catch...
New construction has collapsed, falling below 10,000 units in 2024—the lowest level since 2009. With rising costs, labor shortages, and tightened lending, supply simply can't keep up.
The result? Rates are rising sharply.
- Independent living studios jumped 8.5% in Q1
- Assisted living increased 7.4% across all unit types
- Memory care now commands over $22/sq ft
Even monthly care costs are climbing—adding $1,800–$2,500 per month depending on the level of care.
This episode breaks down the numbers, the causes, and what this means for investors, developers, and families alike. Whether you're allocating capital or planning for loved ones, understanding this demographic and market shift is critical.
Subscribe now and stay ahead of the senior housing curve.
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First, demand is incredibly strong and it's still growing. That's driven mostly by demographics, the aging population. It's fundamental Strong demand. Second supply isn't keeping up. New construction is way down, historically low starts. That's pushing occupancy rates high.
Artificial Intelligence 2:Lagging supply high occupancy, Got it.
Artificial Intelligence:And third rates. While the annual trend might be normalizing around 4% increases, the Q1 data shows substantial year-over-year growth is still happening right now in many, many segments, so the pressure is still on.
John Hauber:Welcome to the Senior Housing Investors Podcast. If you are an owner operator, investor, developer or buyer of senior housing, you've come to the right place. The best way to stay connected with us is to sign up for our weekly newsletter at havenseniorinvestmentscom. This podcast doesn't exist without you, our community. Thank you for listening and reach out to us anytime.
Artificial Intelligence 2:Okay, so you're here because, well, you, you get your head around the senior housing market in 2025. Yeah, and probably pretty quickly. We get that.
Artificial Intelligence:Yeah.
Artificial Intelligence 2:And that's really what this deep dive is for just pulling out the absolute must-know insights from the latest reports and trend analyses out there.
Artificial Intelligence:Exactly. We've been digging into a couple of really key sources for you. First there's the Living Path Market Intelligence Report. That one gives us a really granular look at rates, specifically from Q1 this year, and then, alongside that, we've got a really insightful blog post from NICAP. It lays out the big picture trends shaping senior housing right now.
Artificial Intelligence 2:Right. So the mission today, basically, is understanding the core dynamics. Yeah, you know what's driving demand, what's the deal with supply and where are prices actually heading. Let's jump in, okay, let's unpack it, and I think we have to start with something that just well, it jumps right out of the data. Yeah, the sheer level of demand.
Artificial Intelligence:Absolutely. I mean, all the signs are pointing to demand being at an all-time high. It's quite remarkable, yeah, the NICMA analysis. It shows that annual absorption rates that's basically how fast vacant units are getting filled. They've been over 35,000 units for the last three years running.
Artificial Intelligence 2:Wow, 35,000 a year.
Artificial Intelligence:Yeah, and just to give you some context, if you look back at 2015 to 2019, that period we were seeing under 20,000 units absorbed each year, so it's a huge step up.
Artificial Intelligence 2:That's a massive difference. And you're saying this isn't just like a one-year blip.
Artificial Intelligence:No, no. For three years straight now, the number of units getting occupied has actually outpaced the new inventory being added. Okay, and the result? Well, it's exactly what you'd expect Occupancy rates have climbed significantly. It really feels like the sector hasn't just bounced back. It's kind of thriving.
Artificial Intelligence 2:So NICMP actually calls this the pandemic rebound.
Artificial Intelligence:Yeah.
Artificial Intelligence 2:Like fully complete.
Artificial Intelligence:That's the term they use. Yeah, it suggests, you know, real confidence returning yeah, both for the companies running these places and, really importantly, for the residents themselves. This level of demand it signals a real shift, I think, in the market's fundamentals Shows its resilience too.
Artificial Intelligence 2:So OK, what's the engine behind this? It can't just be catching up from the pandemic years, can it?
Artificial Intelligence:You're spot on. I mean, the rebound was definitely part of it Kickstarted things again, but the main driver, the one that keeps going, is demographics. Simple as that. The aging population, exactly the rapid growth in the number of seniors, especially the baby boomers. You know, born 46 to 64, the very first boomers. They're turning 80 this year, 2025.
Artificial Intelligence 2:Right, that's a key milestone age, isn't it?
Artificial Intelligence:It is and it suggests this high demand isn't just here to stay. It's probably going to intensify.
Artificial Intelligence 2:That paints a pretty clear picture. A huge wave of people entering that age range, where senior housing becomes a much more common consideration.
Artificial Intelligence:And the numbers really back it up. Yeah yeah. Nicmap data shows occupied units in the main markets. Primary and secondary climbed over 950,000 by the end of last year 950,000.
Artificial Intelligence 2:Wow.
Artificial Intelligence:Yeah, compare that to like 876,000 back in early 2020. It's a big jump.
Artificial Intelligence 2:And occupancy rates themselves.
Artificial Intelligence:They reflect that Hit 87.7% end of last year, up from 85.6% the year before. And if you look at what they call stabilized properties the more mature communities they're even higher 88.8%. There's a real chance the whole industry could break 90% occupancy by the end of this year 90%.
Artificial Intelligence 2:that's pretty tight Right. So, ok, massive demand, occupancy climbing, you'd think construction would be booming to meet it right.
Artificial Intelligence:Logically, yes, but this is where the story gets well interesting, or maybe concerning, depending on your perspective. Wow. So, Despite this incredibly strong demand, construction activity is way down. It's lagging significantly. Really, yeah, and I see MAP points out Back in 2019, we were seeing about 70,000 units under construction peak levels 70,000, okay. Today, that number's plummeted to just over 31,000.
Artificial Intelligence 2:Wow, less than half.
Artificial Intelligence:Yeah, it's a dramatic drop.
Artificial Intelligence 2:And that's just what's currently being built. It's a dramatic drop, and that's just what's currently being built. What about new projects starting up? The?
Artificial Intelligence:pipeline. That's maybe even more telling. The number of new construction starts last year, 2024. Fewer than 10,000 units in those main markets 10,000.
Artificial Intelligence 2:That sounds low.
Artificial Intelligence:It is. It's down almost 40% from the year before and it's the lowest number of starts we've seen since get this 2009.
Artificial Intelligence 2:Goodness. So why? Why the slowdown when the demand is so obvious?
Artificial Intelligence:Well, it's a few things tangled together. Costs are up, construction costs, materials, labor shortages are still a real issue and getting financing the lending environment it's just tighter, more cautious for these kinds of development projects right now.
Artificial Intelligence 2:So in the short term I guess that helps existing places fill up.
Artificial Intelligence:Exactly and I see you may point that out. It boosts occupancy for current operators, gives them more pricing power. They can raise rates Right. But the long term worry is this really tight pipeline of new inventory? It could create bigger problems down the road, accessibility issues maybe.
Artificial Intelligence 2:Okay, so less new supply. Higher occupancy leads us to rates. We've seen some pretty wild swings there in recent years.
Artificial Intelligence:Well, the good news, according to NICMAP anyway, is that the annual rate increases seem to be stabilizing kind of finding a new normal.
Artificial Intelligence 2:OK, what does that look like?
Artificial Intelligence:So for 2024,. If you look year over year, rent growth for majority independent living properties was around 4 percent 4 percent OK. And majority says the living was pretty similar about 4.3 percent. It's much more sort of consistent than the real zigzag we saw during the pandemic and with all that inflation afterwards.
Artificial Intelligence 2:That must be a relief for everyone Operators, residents, predictability helps.
Artificial Intelligence:Hugely For operators. Yeah, it makes financial planning easier, allows for investment For residents while rates are still going up. It's maybe a bit more moderate than some of the really sharp hikes we saw. Helps with budgeting, affordability concerns and the general feeling seems to be that this trend maybe around that 4% annual increase mark is likely to stick around through 2025.
Artificial Intelligence 2:Okay, so that's the big picture on rates from NICMP, but you mentioned, the Living Path Report has much more detail for Q1 2025.
Artificial Intelligence:Exactly. This is where we can really zoom in. Living Path breaks it down by independent living, assisted living and memory care. Gives us average rates, average square footage, price per square foot and, crucially, those recent changes year over year and quarter over quarter.
Artificial Intelligence 2:All right, let's dive into that data. Then let's start with independent living. What are we seeing there for Q1?
Artificial Intelligence:Okay, independent living For a studio. The average rate was $3,684. Average size about 416 square feet. That works out to $8.85 per square foot. This is based on data from 618 properties.
Artificial Intelligence 2:And the change. How does that compare?
Artificial Intelligence:That's where it gets interesting. Compared to Q1 last year, up 8.5 percent.
Artificial Intelligence 2:Eight and a half percent. Wow, it's quite a bit higher than the 4% normalization trend.
Artificial Intelligence:It is, and even quarter over quarter from Q4 last year it was up 5.1%, so still strong increases there.
Artificial Intelligence 2:Okay, what about bigger units, one bedrooms?
Artificial Intelligence:One bedroom average rate $4,326. Bit bigger 626 square feet on average. So the price per square foot is lower $6.91. This is from over a thousand properties and the increase Very similar Year over year up 8.4%. Quarter over quarter up 5.3%.
Artificial Intelligence 2:And two bedrooms.
Artificial Intelligence:Two bedroom average rate $5,541. Average size 950 square feet, so $5.83 per square foot. Data from almost a thousand properties. Here the increases were a little lower but still significant 6.6% year overover-year and 4.5% quarter-over-quarter.
Artificial Intelligence 2:So across the board in independent living, q1 saw really strong year-over-year growth, well above that 4% mark.
Artificial Intelligence:Definitely. That's the clear takeaway there.
Artificial Intelligence 2:Okay, let's move to assisted living. That's often a segment people watch very closely. What are the base rates looking like?
Artificial Intelligence:Assisted living. Base rates A shared unit averaged $4,095. Smaller space 355 square feet. So the price per square foot is higher $11.55. Based on 330 properties.
Artificial Intelligence 2:Increases.
Artificial Intelligence:Year over year up 7.1%. Quarter over quarter 3.5%. Still strong.
Artificial Intelligence 2:It's okay. Studio.
Artificial Intelligence:Studio base averaged $4,893. Similar size, 359 square feet, but the price per square foot jumps to $13.62. This is from a much larger sample, over 1,600 properties, and the growth Year over year up 7.8%. Quarter over quarter 4.6%. Again pretty robust. One bedroom based Average $5,993. Larger 526 square feet $11.39 per square foot.
Artificial Intelligence 2:Over 1,500 properties here year over year up 7.4%, quarter over quarter, 4.7%.
Artificial Intelligence:You see the pattern Very consistent and the two-bedroom base About $7,469, quite a bigger 824 square feet, $9.06 per square foot, over 1,100 properties. Increases were 7.5% year over year and 4 and 4.6% quarter-over-quarter.
Artificial Intelligence 2:And assisted living also has care costs on top of the base. Rent right, that's right.
Artificial Intelligence:The Living Path Report puts the average extra cost for care plus meditations in assisted living at $1,808 for Q1.
Artificial Intelligence 2:Okay. So again, like in independent living, we're seeing strong, pretty consistent year-over-year growth across all the base unit types in assisted living, well above that 4% trend line.
Artificial Intelligence:Absolutely. The Q1 data shows significant upward pressure continued.
Artificial Intelligence 2:All right. How does memory care compare? Obviously more specialized care, different environment.
Artificial Intelligence:Yeah, memory care. A companion base unit, so shared, averaged $5,993. Decent size 399 square feet works out to $15.01 per square foot from over 1,100 properties.
Artificial Intelligence 2:Increases there.
Artificial Intelligence:A bit lower than ALL, but still solid. Year over year up 6.5%. Quarter over quarter 3.3%.
Artificial Intelligence 2:Okay, and private rooms.
Artificial Intelligence:Private base units average $7,464. Interestingly, the average square footage is smaller, 330 square feet Smaller, but private Right, which means the price per square foot is way higher $22.64. That's based on over 1,500 properties $22.64 per square foot.
Artificial Intelligence 2:Yeah, and the increases.
Artificial Intelligence:Year over year up 7.3%. Quarter over quarter 4.3% Back up in line with the AL growth rates. And the extra care costs in memory care. Higher than AL, I assume Significantly higher? Yeah, average care plus meds cost in memory care was $2,519 in Q1.
Artificial Intelligence 2:Okay, so that price per square foot for private memory care, that really jumps out.
Artificial Intelligence:It really does Shows the premium for that private space combined with the very specialized care and staffing needed.
Artificial Intelligence 2:Now the report also breaks down the care costs themselves right within AL and MC different levels.
Artificial Intelligence:Yes, it does. Provides quite a bit of detail there. For assisted living, level one, care averaged $727. Level two was $1,272. Level three, $1,818. And level four hit $3,254.
Artificial Intelligence 2:And how much did those care charges increase?
Artificial Intelligence:The year-over-year increases were actually pretty consistent across those levels, hovering right around 5.9%. Quarter-over-quarter was about 2.8% on average.
Artificial Intelligence 2:Interesting and memory care levels.
Artificial Intelligence:Similar story Level 1, care, averaged $1,393. Level 2, $1,835. Level 3, $2,533. And level 4, $3,926. Again, pretty consistent growth. Year over year averaged around 5.8%. Quarter over quarter around 2.7%.
Artificial Intelligence 2:So the percentage increase for the care component seems fairly steady across the different levels of need within each category.
Artificial Intelligence:Yeah, that uniformity is quite interesting. It wasn't like level four costs shot up way faster than level one, for instance.
Artificial Intelligence 2:And quickly. What about other clinical costs like medication management?
Artificial Intelligence:Sure For ALMed management. The average was $536. That was up 5.0% year over year, 2.3% quarter over quarter. So again, steady, moderate growth there too.
Artificial Intelligence 2:Okay. So pulling this all together, looking at this very detailed living path rate data for Q1, alongside those broader NICMA trends, it really feels like that strong demand we talked about earlier is. Well, it's clearly fueling these rate increases, isn't it?
Artificial Intelligence:Absolutely. That's the direct connection.
Artificial Intelligence 2:And the lack of new supply just pours gasoline on the fire. Presumably.
Artificial Intelligence:It seems that way You've got high occupancy because demand is strong and construction is slow. That gives operators the leverage, the ability really to implement these increases. And while NICMAP's broader view suggests things might be normalizing annually around that 4% mark, this living path data for the first quarter shows that in many specific segments the year-over-year growth was still running considerably hotter than that 6%, 7%, 8%.
Artificial Intelligence 2:So maybe that normalization is still kind of working its way through the system, or maybe some markets are just much tighter than the average.
Artificial Intelligence:Could be either or both. It suggests that, while the overall trend might be towards stabilization, there's still significant upward pressure in many areas right now.
Artificial Intelligence 2:OK, so as we wrap up this deep dive, what are the absolute key things you think people listening should take away about the senior housing market as we look towards the rest of 2025?
Artificial Intelligence:OK, three main things I think. First, demand is incredibly strong and it's still growing. That's driven mostly by demographics, the aging population. It's fundamental Strong demand. Second, supply isn't keeping up. New construction is way down, historically low starts. That's pushing occupancy rates high.
Artificial Intelligence 2:Lagging supply high occupancy, Got it.
Artificial Intelligence:And third rates. While the annual trend might be normalizing around 4% increases, the Q1 data shows substantial year over year growth is still happening right now in many, many segments, so the pressure is still on.
Artificial Intelligence 2:So the real aha moments for me listening to this are just the scale of that demand those absorption numbers are huge and the depth of the supply problem. I mean construction starts low since 2009. That's stark. It really is, and the fact that even with talk of normalization, actual prices at least in Q1, we're still climbing pretty steeply in a lot of areas.
Artificial Intelligence:Exactly those are the core dynamics right now.
Artificial Intelligence 2:Which leads to, I guess, a final thought, maybe something for you, the listener to two, on yeah, definitely.
Artificial Intelligence:Given these powerful forces huge demand, tight supply what does that mean long term, you know, for the quality of housing and care for accessibility? Can everyone who needs it actually get it?
Artificial Intelligence 2:And maybe what kind of innovation is needed, what solutions might help fix this growing imbalance between who needs housing and what's actually available.
Artificial Intelligence:That's the big question, isn't it?
