Senior Housing: The Next Real Estate Investment Opportunity Driven by Baby Boomers

The Senior Living Demand Boom

• boomers are turning 80, driving a significant demand increase for senior living communities.
• 📈 Occupancy rates in senior living facilities are reaching new highs.

Investment Characteristics in Senior Living

• 💰 Ventas, a senior living REIT, is investing billions annually and seeing strong returns, with levered IRR in the low to mid-teens.
• 🏗️ Acquisitions are happening below replacement costs, a rare combination of investment characteristics.
• ⚠️ The cost of construction labor and materials, coupled with current rent levels, makes new development financially challenging.

Supply vs. Demand Dynamics

• 📉 Annual inventory growth in senior living facilities has dropped below 1%, the lowest since 2006.
• 🏠 Even with the highest historical levels of new development, population growth is expected to outpace supply.

Multifamily Market Trends

• 📊 Multifamily demand has been strong, leading to increased occupancies and rents, absorbing previously concerning supply levels.
• 🏘️ Starts in multifamily housing were the primary driver of overall housing starts.
• ⚠️ While mortgage rates may decrease, the lack of supply in both new construction and the existing home market will likely lead to price increases, negating the benefits of lower rates.