With Senior Housing Filling Up, Rents Are Growing And Lenders Are Flocking Back

Starting this year, 10,000 baby boomers turn 80 every day. And as octogenarians make up a bigger portion of the U.S. population than ever before, capital is flowing freely to a senior housing sector that hasn't built nearly enough to keep up.

Senior housing mortgages backed by the Department of Housing and Urban Development rose by 89% year-over-year in 2025 to a record high $6B, according to Trepp. Now, anticipating the baby boomer generation’s next housing move, lenders are capitalizing on investor appetite for buying and rehabilitating existing senior housing facilities to capitalize on a market with high demand and little supply.

“Nothing's really been built of material magnitude over the last five or six years,” said Steven Kennedy, executive managing director of specialized senior housing lender Vium Capital. “Yet this wave of baby boomers has just gotten closer and closer.”

Senior housing encompasses two buckets: skilled nursing homes, where residents receive around-the-clock professional medical care; and independent and assisted living facilities that offer support for daily tasks and minor medical issues, normally alongside social activities.

The average age of residents in senior housing is early to mid-80s, according to Clarion Partners, a Franklin Templeton-owned real estate investor that is pushing deep into the asset class.

Inventory is at its lowest level since 2006, and supply growth is at its lowest level in a decade, according to PwC and the Urban Land Institute’s 2026 Emerging Trends report.

And while the pandemic pushed senior housing occupancy to a record 78.8% low by early 2021, occupancy is now even higher than pre-pandemic levels at 90%, data from the National Investment Center for Seniors Housing & Care shows.

Demand is likely to continue to swell in the coming years, Lument Senior Managing Director and Head of Seniors Housing and Healthcare Production Aaron Becker said.

“We're an older country,” he said. “When you look at a demographic standpoint, it's a very, very attractive business.”

More transactions have also been taking place as the sector recovers from the post-pandemic years, Kennedy said. 

“If you were a mom-and-pop operator, it was pretty tough to survive,” he said. “You wanted occupancy [and] NOI to get back to a reasonable level that you could transact and sell it at a return that made some sense.”

Lending has accelerated over the past year as fundamentals grow stronger, spurred further by a new initiative from HUD. The agency introduced an “Express Lane” policy, which fits under its lending program for senior housing facilities, in the middle of last year.

The initiative streamlines agency mortgage insurance approvals with a maximum of 7% loan-to-value and minimum debt service coverage ratios of between 2.0 and 1.6, depending on whether the mortgage is for a skilled nursing or assisted living facility.

More than 86% of investors intend to allocate capital toward senior housing this year, according to a report from JLL. And as investors return to the market, more stable financing via government agency guarantees is becoming available, Walker & Dunlop Senior Managing Director Kevin Giusti said.

“Probably what the agencies were seeing is that properties are doing better. They're more ready for permanent financing,” he said. “Occupancy is higher, cash flow is better.”

The asset class is also somewhat market-agnostic because when seniors move into assisted care, they generally decide to live near family, Kennedy said.

“Some grandparents might say, ‘Hey, we're going to go live in Naples, Florida,’” he said. “But when they end up needing help, they probably want to be around their adult children, and so they might come back to Columbus, Ohio.”

The sector’s fundamentals are attractive enough that equity players and even banks are getting involved, he said, with lending currently concentrated on acquisitions and refinancing properties that struggled during the pandemic rather than new construction.

Senior housing’s outlook is very different from multifamily, where deliveries from the historic 2023 multifamily construction boom are projected to push the asset class’ rents down by 0.2% by the end of the year, according to Zillow.

Meanwhile, constrained senior housing supply pushed rents up by 4.4% last year, while inventory grew by just 0.6%, according to NIC MAP data. National demand is expected to outpace supply by 360,000 units by 2030.

Construction of senior housing decreased for the 16th consecutive quarter at the end of last year to fewer than 1,900 units in primary markets, Multi-Housing News reported. Senior housing demand will eventually “turn the spigot on for new construction,” but not until next year, Kennedy said.

While investors pile into the space in anticipation of growing rents, the lack of supply could mean some seniors struggle for places to live.

“We anticipate that the demand for housing and services will continue to grow,” Lisa McCracken, NIC’s head of research and analytics, said in a statement. “The rising occupancies and low inventory growth is going to lead to some real-life challenges for older adults and their families in certain markets.”