Senior housing is positioned for a period of rapid growth. The US population age 80 and older is expected to rise by more than four million, to 18.8 million, by 2030. At the same time, annual inventory growth for senior housing has dropped below 1%. Compared to 2024, the market has done a 180, says Alex Vice, senior director at Walker & Dunlop.
“At the start of 2024, senior housing volume was down 32% year over year,” notes Vice. “Many of the deals that closed were already in process from 2023, when there was a lot of economic noise.” He notes that a growing supply-and-demand imbalance is putting the market on a new trajectory.
Thomas Falkenberg, director at Walker & Dunlop, says this mismatch between supply and demand could create a “golden age” for the sector. Moving into the next cycle, both Vice and Falkenberg see strong tailwinds setting the stage for broader investor participation and sustained momentum.
Buyers Push Forward Despite Rate Pressures
In the last year, distressed deals drew interest from private buyers, but institutional players remained central to the market, according to Falkenberg. He says private groups often focus on troubled properties, while REITs and larger institutions helped the market rebound more quickly after the prior year’s slowdown.
“We’re seeing yields get as low as 6% on true senior housing assets,” says Falkenberg. “We expected it to take a little longer to get to that point, but it’s exciting. It shows buyers are underwriting through the noise, and it shows conviction in rent growth, occupancy growth, and exit assumptions.”
He adds that the higher-rate environment hasn’t slowed the recent uptick in activity. Instead, it reflects renewed confidence in the sector’s fundamentals, with capital flowing into opportunities across a range of asset profiles.
Debt Markets Offer New Options
Beyond the sales momentum in the market, new capital options are opening up. In the past, Freddie Mac was the predominant agency lender, but Fannie Mae has entered as a competitor, giving buyers more choices.
Vice notes that HUD’s “fast lane” has also gained attention. The expedited process offers an attractive option for certain borrowers and reflects a broader trend of debt-market flexibility. Together, these developments give owners more leverage, whether pursuing a sale or holding for the long term.
Supply Issues Will Continue to Linger
Vice emphasizes that future developments in the senior housing market must be thoughtful, targeting areas where aging supply, density, and affordability intersect. He adds that secondary and tertiary markets may also be attractive.
“It’s really a great time to be a seller,” says Vice. “The demand isn’t going away, and there is still a lingering supply issue. I don’t want this to discourage investors from entering the space, even if they have to pay a higher price per unit or a tighter cap rate than before, because the demand isn’t going away.”
For example, Walker & Dunlop recently closed on a $146.5M portfolio in the Midwest. The portfolio included four well-performing communities that were built within the past 10 years. The purchase price demonstrates that quality assets with superb operating margins, driven by great operating partners, are garnering interest at high prices per unit.
Falkenberg agrees, noting that constrained supply and a rapidly aging demographic will have long-lasting effects. He compares the situation to the single-family housing shortage from the global financial crisis. “Single-family homes have the lowest barrier of entry to build. We’re 13 years removed from that period and there’s still a supply shortage.”
Looking ahead, Vice says, “It’s really just an exciting time to be in the space and see what’s next for senior housing opportunities.”
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