How aged care can rebound – and what smart leaders can learn from it

It's the biggest but least-known business renaissance story of the century: the sudden boom in senior housing.

Demand for senior housing has soared to a record high this year after five years of being sapped by coronavirus lockdowns. By the end of the second quarter of 2025, the number of senior housing units occupied reached an all-time high of 625,800 units. The occupancy rate exceeds 88%, an increase of 13% from the worst period of the epidemic.

Increasing demand for all types of senior housing is driving up prices, with rents in independent living communities rising 4.25% to $4,402 per month this year and rents in assisted living communities rising 4% to $6,976 per month.

All signs point to housing supply tightening further — and prices rising. A nationwide slowdown in construction due to rising interest rates and investment jitters caused by the pandemic means that only 809 units were added across the country in the past three months. This is the smallest increase in senior housing inventory in the past 20 years.

Boom and bust cycles are a fact of life for many industries in the United States, but few rebound as quickly as the senior housing industry, which includes the growth of independent living, assisted living and nursing care.

During the coronavirus lockdown, our hearts have often been broken as the most vulnerable among us succumb to this contagious virus. Older adults are increasingly wary of community living, and many are postponing surgeries that require short-term acute rehabilitation care. Occupancy rates dropped significantly. Hundreds of nursing home operators filed for bankruptcy and new construction fell to historic lows.

But when the pandemic ended, strong demographics began to take hold. The long-awaited silver tsunami of baby boomer retirement has finally arrived.

More Americans are turning 65 now than at any time in history—11,200 Americans every day, more than 4 million every year, and a total of 76 million people who are part of the largest generation of older adults in history. Within 10 years, for the first time in U.S. history, the number of people over 65 will exceed the number of people under 18.

All these baby boomers need somewhere to live. After the pandemic, as life expectancy rises again, Americans are increasingly turning to senior living communities.

Compared with previous generations, baby boomers are less willing to move into senior communities and prefer to age at home. The home health care business is growing significantly, but faces a serious obstacle—a worker shortage. Six out of 10 home care agencies reported severe staffing shortages, with one study reporting a national shortage of 446,000 home health aides.

Home health care also becomes more expensive as people age: A common rule of thumb is that if you need more than 40 hours of care per week, home care costs more than community living.

Driven by strong population growth, senior housing has attracted billions of dollars in investment from private equity and real estate investment trusts. Since 2000, healthcare REITs have quadrupled in size. Real estate investors typically value reliability over huge bonuses, but last year they did both, with the healthcare REIT posting a total return of 24.2%.

Of course, significant outside capital investment in senior housing can also have negative consequences. Many investors new to the healthcare industry want to reduce the number of businesses they do.

Ultimately, though, senior housing is about people—their health, trust, comfort, and safety. Aged care provides some of life's highest highs and lowest points. Not many other businesses are so directly connected to their customers' well-being, 24/7, every day, every night, every season.

The senior housing industry now faces a once-in-a-lifetime opportunity. The business may be housing, but success or failure will depend on the happiness of millions of senior citizens.

Photo by Getty Images

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