Will Demographics Lead to Short-Term Decline in Senior Living Demand?

Senior living developers and operators are preparing for a population boom that will drive demand for senior housing going forward. With baby boomers still years away from moving into senior living communities in large numbers, building trends today are still well ahead of that particular population curve.

Yet, other age cohorts will lead to demand swings in the meantime, says Beth Mace, chief economist at the National Investment Center for Seniors Housing and Care (NIC). Mace recently examined some of those other age cohorts as they relate to senior housing demand in the coming years.

Based on anecdotal evidence indicating the average move-in age to senior housing is 82 to 84 years of age and the average length of stay is around 2 to 3 years, Mace analyzes an age cohort comprising 82- to 86-year-olds, noting that growth in the cohort actually began decelerating in 2013 and will experience negative growth this year and next.

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Source: NIC
Source: NIC

“This deceleration in growth largely reflects the effects of the Great Depression when fertility rates fell sharply causing births to hit a low point in 1933,” Mace writes in a blog post published by NIC. “If you add 82 years to 1933, those born in 1933 are 82 today, the lower age of the cohort residing in seniors housing.”

The cohort is expected to experience growth again between 2017 and 2025, but there could be a decrease in demand in the meantime.

“This suggests that there will be a demographic slowdown in this age cohort which could impact demand for seniors housing this year and next,” Mace writes. “By 2017, the 82-86 cohort will start to accelerate again and will generally continue to do so until 2025, providing a nice demographic driver for seniors housing. Between 2017 and 2025, this cohort will increase in size by 1.5 million persons, or 29% from 5.1 million to 6.6 million.”

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There are several implications, NIC’s analysis notes, including this short-term decline in demographics as a driver for senior living demand. Additional considerations include ongoing growth of the 75- to 81-year-old age cohort through 2018, which Mace notes may drive post-acute care needs such as those relating to knee and hip replacement surgeries.

Combined growth also leads to more opportunities for post-acute care coordination and new development types, she notes.

The baby boom influence, while still years away, is the next indicator for demand as the group shifts from being the adult influencers of senior living decisions to becoming the resident population themselves.

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Written by Elizabeth Ecker

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