June 21, 2026 by Noah Zucker and Chloe Gallivan

America Faces A Massive Senior Housing Shortage. Wall Street Sees Opportunity

When Karen Tahler’s 62-year-old brother Raymond Soderberg started going blind due to a degenerative eye condition, she sought senior housing where he could receive the appropriate support. The process took more than three years. 

Tahler reached out to numerous private-pay facilities near her San Fernando Valley, California, home. Many were full, and the ones that weren’t charged between $7K and $10K per month. That was more than Tahler, the director of operations at Resolve Law Group, and her brother, a retired attorney, could afford.

“It was extremely draining and absolutely felt hopeless,” said Tahler, a 56-year-old mother of three.

Soderberg was living with his sister when she finally secured him a unit in The Pinnacles at Burton in Los Angeles. Studios there start at $5K per month.

Photo: Google Maps

The Pinnacles at Burton community that Karen Tahler moved her brother into after a three-year process

Tahler was relieved for her brother but worried what might become of seniors with fewer resources.

“What happens to other wonderful human beings that don’t have family, that don’t have support?” she said.

That question looms larger every day. The nation's elderly population is about to explode, and no one is building enough facilities to house them as they age, setting the stage for a senior housing affordability crisis.

The nation’s 85-plus cohort is projected to reach nearly 16 million by 2045, an increase of about 125% from last year’s numbers, according to the Census Bureau. The mean age Americans enter senior housing is 84, according to a 2024 study published by JAMA Internal Medicine. 

Yet construction is slowing. Just 16,423 senior units were under construction last quarter, the smallest pipeline since 2012, according to National Investment Center for Seniors Housing & Care data provided to Bisnow.

Given the skyrocketing demand for senior housing, the sector’s muted construction pipeline has left experts concerned.

“The point is that we should have been doing this yesterday,” said Sarah Patterson, a research assistant professor at the University of Michigan specializing in aging demographics.

The lack of new supply is pushing rents up. Average rents reached $5,479 at the end of last year, up 28% from Q4 2020 and 50% from Q4 2015, according to JLL. 

Wall Street has noticed. Investors spent $12.1B on senior housing real estate in the first three months of 2026, the most of any quarter in at least 20 years, according to MSCI data provided to Bisnow. 

Over the past 12 months, senior housing was the second-most-active property asset class, behind only data centers. 

“Buyer pools have been increasing,” said Trent Johnson, senior managing director at Harbert Management Corp., whose senior housing division has developed more than 11,000 units.

“That has changed dramatically over the last six to nine months. … If you go back 18 months ago, you didn’t have the depth of the buyer pool that we have today chasing our space.”

Necessity Housing

Senior housing is a wide-ranging sector. The level of care ranges from almost none at independent living communities designed for active residents to round-the-clock medical support at nursing homes and memory care facilities.

Elevated rents likely won’t deter many incoming residents. Move-ins are often a response to traumatic major life events.

The prototypical tenant in senior housing operator Calson Management's portfolio is generally a woman who loses her spouse and steadfastly tries to stay in her home until a jarring event occurs, like a nasty fall, Managing Partner Jason Reyes said. 

These incidents often scare her adult children, who respond by rushing to get the woman into senior housing as soon as possible.

“Senior housing isn't always a desire, necessarily,” Reyes said. “A lot of times it's a necessity.”

While injuries can make their homes inaccessible, seniors are also vulnerable to dementia, which could make it impossible for them to live alone, Patterson said.

Patterson not only studies senior housing issues at the University of Michigan but is also searching for a facility for her mother, who lives in southern Indiana.

“I was actually personally shocked by the low number of 55-plus residences that are available, at least in this area, and even when they are available, just the extreme cost,” she said.

Some believe that the next generation of tenants is uniquely positioned to afford the rising cost of senior living. 

“This incoming boomer generation is the wealthiest generation in the history of the world,” Harrison Street Senior Managing Director Rob Korslin said. 

Even so, that money is heavily concentrated in the generation’s upper class. The top 10% of boomer households held 71% of the generation's $77T in total wealth in 2022, according to a February report from Pew Research.

A larger segment of the population falls into what National Investment Center Head of Research Lisa McCracken called the “forgotten middle.”

Seniors between 75 and 84 making between $25K and $74K annually often make too much to qualify for federal support like Medicaid but still can’t afford private senior housing or long-term care, according to NIC. 

About 90% of retirees rely on their Social Security checks, according to a 2025 Transamerica Center for Retirement Studies report. More than 50% of them consider it their primary source of income.

The average monthly Social Security payment of just over $2K pales in comparison to the $5,479 average rent for a senior housing unit.

“It's a growing problem,” said Tim Wheat, a partner at Miami-based affordable housing developer Pinnacle Housing Group. “The market's not leading, in my opinion, particularly for people on fixed incomes.”

More than 17 million Americans aged 65 and older are living at or below 200% of the federal poverty level and considered economically insecure, according to a 2024 National Council on Aging report. The organization found that these seniors often struggle with rising housing and healthcare costs.

On top of that, those in need of assisted living — which can include memory care and help with daily tasks — can't pay for it all with federal health insurance like Medicare and Medicaid, McCracken said. 

“That is the reality of aging in this country,” McCracken said.

“If you need aging care, you better save up,” she added.

Vanishing Pipeline

It takes “leprechauns and unicorns” to aggregate capital stacks for ground-up builds in 2026 due to elevated interest rates and construction costs, Reyes said.

Lenders are hesitant to dole out cash, and when they are willing to, it is often at a rate that makes projects unfeasible. This means developers generally target the wealthiest tenants who can afford the high rents that cover rising construction and operation costs.

“Development in senior housing is just a much higher bar than other sectors,” Korslin said. “There’s a limited amount of developers who have that expertise over decades.”

Those with the ability to build senior housing are doing it less and less. Harrison Street, one of the nation's leading developers and investors in senior housing, focuses specifically on high-income and supply-constrained areas, down to the ZIP code, Korslin said. 

“These are markets where it's very difficult to get zoning for senior housing. It's very difficult to find land to build senior housing and to build the type of projects that we want to build, which is larger-format, resort-style communities,” he said.

Calson is working on the Ananta, a 76-unit community with 180-degree ocean views in ritzy Santa Cruz. There are already 150 people on the waitlist for the project, set to deliver in January. Rents will start at $10K per month, plus care fees.

Calson has a diversified portfolio with less pricey communities as well, Reyes said. Focusing on the wealthiest seniors isn’t an entirely risk-free strategy, because those potential tenants are also the most likely to have the financial resources needed to stay in their homes. 

“If you can afford $20K a month to live in a luxury building, you can afford to have 24-hour in-home care,” he said. 

But there is another barrier to new construction. Leasing up and operating new senior housing communities requires highly specialized expertise, which many newcomers flooding the market don’t have.

At the other end of the spectrum, affordable developers like Pennrose have been able to deliver new products via the federal low-income housing tax credit, although they acknowledge it isn't nearly enough to meet the need.

LIHTC credits distributed by the Pennsylvania Housing Finance Authority made up 100% of the funding for Good Shepherd, a 55-unit affordable complex Pennrose delivered in May in West Philadelphia. It is open to residents making up to 60% of the area median income. 

Pennrose Regional Vice President of Pennsylvania, New Jersey and Delaware Lindsey Samsi would have liked to build more on the site but said Pennrose can’t without reforms to LIHTC, which has been broadly critiqued for not allowing developers to build in a cost-effective manner.

“Right now, that availability of funding dictates that unit count,” she said.

The competition for new affordable units is intense. 

Miami-based affordable housing developer Pinnacle Housing Group has built 12 independent living senior communities and has four more in the pipeline, primarily in South Florida. All of them are subject to a lottery process.

Its 110-unit Pinnacle at La Cabaña, built in 2025, received 1,800 applicants, said Wheat, a partner at Pinnacle. That came out to roughly 16 per unit.

“What makes that important is the demand,” Wheat said. “We're seeing a lot of our aging workers with no place to go other than living with a family member, and it's a priority for a number of the cities we partner with.”

Photo: Google Maps

The Pinnacle at La Cabaña community

And even though senior housing overall, particularly continuing care communities, dealt with a major drop in population during the pandemic, buildings have filled back up. Occupancy bottomed out at 80.1% in the second quarter of 2021 but grew to nearly 89% at the end of last year, in line with long-term averages, according to JLL.

Bryan Lockard, who leads JLL's U.S healthcare and alternative real estate practice, said 30,000 units were absorbed over the past year, while just 10,000 were delivered. That is part of why he predicts senior housing rents will grow 5% annually over the next five years — faster than the rate of every year since 2009, with the exception of 2023.

On the resident side, Wheat said rising prices may lead some tenants to delay their transition from independent living to a higher level of care.

“It's something we're going to have to look at if we start seeing people stay in our communities longer, including situations where they may not be able to care for themselves and have no one else to do so,” he said. 

Cashing In On The Shortage

Due to the cost of labor and materials, many developers are holding off on starting projects, according to a NIC report. With pressure on availability mounting, investors are spending billions acquiring properties rather than building new ones. 

There were $29.7B of senior housing properties sold in the 12 months ending in March, according to data provided to Bisnow by MSCI. That is nearly twice the $16.2B in trades the prior 12 months. 

Property values have spiked, too. The average price per unit for senior housing hit a record $147K in the first quarter, up 39% in just two years, according to MSCI.

As transaction volumes rose last year, capitalization rates compressed by between 25 and 50 basis points, according to a Cushman & Wakefield report, indicating that underlying values are increasing faster than properties' net operating income.

Senior housing is now considered the No. 1 asset class for investment in all of commercial real estate, according to MetLife Investment Management. 

Harrison Street has been a major beneficiary. It sold $800M of senior housing properties over 30 days in March and April and $2B over the prior 12 months, according to a press release.

“Everybody sees the structural supply-demand imbalance,” Harrison Street's Korslin said. 

Ventas, one of the biggest publicly traded firms, has set a goal of acquiring $2.5B worth of senior housing properties this year. It is already seeing big returns on its 80,000-unit portfolio and boosted its dividend by 8% after the first quarter.

“There were only about 2,500 new senior housing units started in the fourth quarter of 2025, while we expect over 2 million people to turn 80 in 2026,” Ventas CEO Debra Cafaro said on the company's earnings call in May. “Both sides of this demand-supply imbalance are weighted strongly in our favor.” 

Plugging The Gap 

Nick Stengle, the CEO of Brookdale Senior Living, doesn’t see an end in sight to the rising rents and occupancy.

“Markets will start filling up because the supply just isn't there,” said Stengle, whose company owns more than 43,000 senior housing units.

For new construction to start penciling more broadly, he expects the senior housing sector would need to see rents increase by between 30% and 40% nationwide.

That means some in the industry are seeking alternative solutions to housing the nation's growing elderly population.

Photo: Unsplash/Age Cymru

NewCourtland CEO Joseph Duffey said the residential sector as a whole could play a role by providing units that are a good fit for seniors, even if they aren’t explicitly earmarked for that demographic.

He mentioned accessory dwelling units, single-room occupancy in congregate settings, and small, naturally affordable apartments as good potential options for some seniors — especially if they are in walkable neighborhoods near retail and family members.

“If we can expand our housing supply and think very differently about a diverse set of housing types that we need, we can start addressing the issue,” AARP Public Policy Institute Director of Housing and Livable Communities Shannon Guzman said.

But Lockard said that with some top-notch properties selling for north of $1M per unit, the opportunity might be too enticing for developers to stay on the sidelines.

That is what Tahler was hoping for. She was unsettled by the experience of finding senior housing for her brother but wasn’t opposed to real estate players profiting from the sector. 

“Let them,” she said. “As long as there’s housing that gets developed.”

But it could still take up to seven years before the first resident can move into a new senior living community due to entitlements, zoning, development and licensing, Stengle said.

That is significantly longer than the roughly 20 months it takes to complete a multifamily building, and that timeline may stretch further as construction costs and inflation make it harder for projects to pencil.

So, even if developers start breaking ground within the next year, it will be “several years” of managing a low-supply period, McCracken said. 

That means some seniors will have to hold out until more space becomes available.

“They're going to wait and put it off until it's a little more acute, so people are going to be moving in a little older, more frail than what they would otherwise,” McCracken said.