The fast-growing U.S. senior housing market enjoys strong demographic tailwinds from an aging, asset-rich generation of retirees. A shortage of purpose-built property supports demand for market incumbents who can offer a high level of services to prospective residents.

The rising need for senior housing

Declining health in old age, combined with limited family support, underpins demand for professional senior housing solutions that can meet complex medical needs and improve quality of life.

Elderly people typically move into dedicated senior housing—which includes senior apartments, independent living, assisted living, and memory care—for one or more of the following reasons:

First, when chronic physical health and mobility issues prevent them from living independently and require medical management. Roughly two-fifths (42%) of over-65s in the U.S. are obese—up from 30% in 2000.¹ Related health issues include hypertension, osteoarthritis, and diabetes, the latter of which now affects 29% of over-65s in the U.S.²

Second, when cognitive decline leads to memory loss, confusion, and difficulty performing daily tasks, making it unsafe to live independently. Nearly 7 million Americans now live with Alzheimer's.³ Specialist memory care facilities and nurses can provide tailored support.

Third, when relatives are unable to provide care. A ‘sandwich generation’ of dual-income households with children of their own is increasingly unable to provide the support older relatives need. More than one-third of caregivers for adults report workplace burnout.⁴

Fourth, out of choice. More than one-third of older U.S. adults feel lonely, according to a recent study, often exacerbated by medical issues like hearing loss and by bereavement.⁵ Supported housing can provide social interaction, enabling people to live more independently and, on average, longer lives as part of a safe community.⁶

Wealthy ‘boomers’ fuel demand

As the first wave of ‘baby boomers’ approaches 80 years old, the elderly population is poised to rapidly expand, creating a vast and growing addressable market for senior housing solutions.⁷

The number of U.S. adults aged 80 and over is projected to expand by 5% a year to almost 20 million by 2030.⁸ Their share of the total U.S. population is due to correspondingly grow from 3.8% to 5.4% by 2030.

This demographic shift is accompanied by spending power: the baby boomer generation holds more than half (52%) of U.S. household wealth.⁹ The purchasing power of asset-owning older people has risen in line with asset values since the financial crisis, making supported housing options financially viable for more of that generation. According to an industry estimate, the affordability of senior housing has improved almost four-fold since 2008.¹⁰

Supply-demand dynamics support incumbents

Despite strong demand dynamics, supply growth has slowed. The rate at which U.S. senior housing stock is expanding has more than halved over the past five years, driven by a decline in new development.¹¹

This trend shows no sign of reversing in the context of elevated construction and financing costs: the number of new construction starts in 2024 was two-thirds lower than in 2019.¹²

We believe incumbents, including Welltower and Ventas, are well-positioned to benefit from this supply-demand imbalance, which is driving high and rising occupancy rates within the sector. Welltower reported 89% occupancy across its portfolio in Q4 2024.¹³

Effective market segmentation is an important part of these companies’ strategies, with differentiation by price and service. Some communities can offer a continuum of care, from independent to assisted living, enabling longer-term stays that are less disruptive for residents.

As a labor-intensive industry, we note the short-term risk of wage cost inflation that could follow tighter immigration restrictions in the U.S., potentially crimping margins. Irrespective, the long-term structural drivers of demand for senior housing remain intact and should be strengthened further by demographic trends. The industry expects rents to increase by between 3% and 7% across most segments of the U.S. market this year.¹⁴

We believe supply-demand dynamics support opportunities for incumbents who can leverage their scale and operator relationships to deliver affordable housing solutions to aging baby boomers.

Opportunities in The Silver Economy

The rising demand for senior housing—and broadly eldercare—are socioeconomic trends that present unique opportunities for investors. NEI Global Corporate Leaders Fund seeks to generate long-term capital growth by investing in companies that are focused on addressing socioeconomic issues such as eldercare globally. Find out more about NEI Global Corporate Leaders Fund.

About this article

This is a modified version of an article published by Impax Asset Management in March 2025. You can read the original article in full. Impax is the subadvisor for the NEI Global Corporate Leaders Fund.