Demand for senior housing — independent living, assisted living and memory care — could well exceed pre-pandemic levels within the next five years, thanks to the growth of the 75+ demographic in the United States, which has been significant and will only continue to grow at increasing rates, according to a new report from Integra Realty Resources. 

“I think a key takeaway is that the growth of the higher-income population is growing at a faster rate than the lower-income demographic, which is a good thing for senior housing, as you have to be able to afford, in most cases, to stay in one of these [communities],” the report’s author, Bradley Schopp, MAI, told the McKnight’s Business Daily.

According to data from Claritas, the 75+ population is forecasted to increase 9.6% between now and 2028, and the 85+ population is expected to grow 7.7% during that time. 

Higher-income homeowners as a group are forecasted to grow at faster rates. The group of homeowners aged 75 or more years with annual median incomes of more than $50,000 is expected to grow by 20.2%, whereas those with median incomes of more than $75,000 are forecasted to grow by 27.8%.

By comparison, the growth rate for occupancy in 2014 was about 2.4%, Schopp said. Citing data from the National Investment Centers for Seniors Housing & Care, he said, the growth rate for demand averaged about 2.15% at the time, “so it trended along very nicely from 2015 to 2019, right in line with that data.”

Although a boom in senior housing demand will occur over the next few years, it could be a while before new construction catches up, Schopp said. 

“Right now, it’s very difficult to construct new facilities, just because the costs are so extreme,” he said, adding that construction, labor and the cost of borrowing money all are higher than they previously were.

“So what we might have is a time over the next few years where occupancies rise because there’s not as many new properties that are being added into the market. And then we might have a wave in a few years if some of those other things shake out, where maybe there’s another boom because the market occupancies are so high,” Schopp said.

Developers and senior living providers that are able to cater to higher-income individuals should be well-situated over the next few years, he said.