Boomers drive up senior living occupancy rates with moves to independent living

Older adults are moving into senior living communities at record rates, led by independent living and active adult rental communities, according to the National Investment Center for Senior Housing & Care, which reported that the US senior living occupancy rate increased 0.8 percentage points to 88.1% in the second quarter.  

“Explosive” demand for independent living properties led overall occupancy increases, with a jump of 0.8 percentage points to 89.7%. For the third consecutive quarter that outpaced assisted living’s rate, which landed it at 86.4%, according to the latest senior housing market fundamentals report from NIC, using NIC MAP data. 

Active adult also fed senior living occupancy increases in the second quarter, reporting a 92.3% occupancy rate, besting the overall senior living occupancy rate of 88.1%, which was up from 87.3% in the first quarter, according to NIC.  

“The youngest baby boomers have turned 60, and the oldest are approaching 80, so this group is starting to make decisions about how and where they want to age,” Carline Clapp, NIC senior principal, said in a statement. “Baby boomers appear to prioritize mental, physical and social wellness, and they’re choosing to move into independent living and active adult communities because that lifestyle is baked into the experience.” 

Demand for senior living, along with limited construction, continues to drive occupancy rates higher. The number of occupied units increased from 620,000 to 626,000 in the second quarter, continuing an all-time high for senior living demand. In addition, the number of newly available senior living units was the lowest since 2005, with only 809 new units opening in the second quarter, less than 1% inventory growth year over year, according to the data. 

NIC MAP reported that annual absorption remained stagnant at 3.7% in the second quarter, whereas annual inventory growth dropped from 1.2% in the first quarter to 1% in the second quarter. Construction versus inventory also fell, from 2.6% in the first quarter to 2.4% in the second quarter.  

In early 2024, NIC MAP data indicated a need for 156,000 additional senior housing units by 2025.  

Inventory issues are expected to worsen, as NIC MAP data indicates a need for 549,000 additional units by 2028 and 806,000 additional units by 2030.  

“Many capital providers and builders are taking a cautious approach to new projects as they monitor economic conditions and public policy developments,” NIC MAP CEO Arick Morton said in a statement. “This slower pace of construction continues to widen the gap between future supply and the growing demand from baby boomers who will need housing and care options in the coming years.” 

Monthly rental rates for independent living communities also rose, increasing 4.25% from the prior year, to $4,402. Assisted living saw a 3.97% increase, for an average monthly rent of $6,976. This compares with overall assisted living annual rent growth of 4.1% for the second quarter, up from 4% in the first quarter.  

“Baby boomers may be the wealthiest generation in US history, but nearly half of the 14 million middle-income seniors won’t be able to afford private-pay senior housing,” Clapp said. “We need more housing units for America’s older adults overall, and we need more affordable options for those with modest incomes.” 

NIC MAP also reported that all of the 31 primary markets that it follows have occupancy rates trending well higher than 80%, with Boston (91.7%), Cincinnati (91.5%) and Baltimore (90.9%) maintaining their standing as the top three. Meanwhile, Miami (85.1%), Atlanta (84.6%) and Houston (84.5%) remained the bottom three.