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By the year 2050, nearly 20 percent of the United States population will be 65 or older, compared to 15 percent today. As the nation ages, experts are also contemplating what the increase in the aging population will mean for the workplace, economy, healthcare, and senior living. Learn more about the Silver Tsunami and how it will impact the future of senior living in America.

What is the Silver Tsunami?

As the baby boomers reach their senior years and as longevity increases, there will be a groundswell of seniors. “The Silver Tsunami” is a metaphor used to describe the expected increase in the senior population. Today 15% of Americans are 65 or older. That number is expected to balloon to over 20% by 2050, bringing an estimated 40 million additional people relying on Medicare, using the healthcare system, and seeking senior living.

While the term, “Silver Tsunami” is an attempt to understand the impact the increase in the senior population will have on the nation, not all seniors appreciate the term. A tsunami, or massive wave, has a devastating effect on the people and land that it hits. Tsunamis are destructive and deadly, wreaking havoc on entire populations. It’s important that when we talk about seniors in our community, we focus on their positive attributes and respect their life stories. The aging population can bring positive change to healthcare and senior living – changing what it means to grow old in America.

How the Silver Tsunami Impacts Senior Living

Regardless of its negative connotation, the fact is that Tsunamis have a huge impact and the increase in America’s aging population will too – especially on senior living. Not only will the demand for senior living facilities increase, but the style and manner in which senior living and senior care are delivered will change. Baby boomers have already started revolutionizing senior living and their expectations will continue to change what it means to age.

1. Increased demand

With the increase in population, there will be an increase in demand and the senior living industry will have to expand to meet that demand. Expect to see senior living communities popping up all over the country – not just in typical retirement states like Florida and Arizona. Many seniors are moving away from these states and halfway back to their home states, even inventing a new retirement term, “halfbacks.” As the demand for senior living increases, senior communities will rise in rural and urban settings alike.

2. Lifestyle luxury

Not only will there be more senior living options, but they will look a little different. Today’s baby boomers expect more when it comes to senior living and senior care. They want accessibility and convenience partnered with unmatched care and amenities. The future of senior living is not institutional. It’s vibrant and active, encouraging and empowering – reflecting a generation that has changed their nation.

3. Options, options, and more options

As demand for senior living grows and the boomer generation raises the standard of senior living, we can expect to see more options and personalized care. From concierge services to transportation and even customized care offerings, senior living in the future will continue to move away from institutional care toward a true sense of home and community

4. Development Trends

According to the NIC MAP Data Service, in 2018 nearly 69,000 senior housing units were under construction as of the 4th quarter, that number declined to just over 63,000 as of the third quarter of 2019. We are seeing a shift towards larger projects, often in infill locations, after an excess supply continues to plague some markets. These larger projects normally take longer to deliver, meaning that the pace of new unit deliveries should continue to moderate.

5. Operating Environment

Markets have grown more competitive with this new product opening, despite the high number of completions the absorption has been trending up. Those who entered the senior housing investment market in recent years are learning how critical the quality of the operator is and has led them to consider buying into operating companies. REITs and large operators are likely to continue to prune their portfolios, and developers who have developed assets over the past few years, that are now at, or reaching stabilization, will likely seek to monetize, while the transaction and finance markets remain strong.  

6. Investors

Investors are excited by the prospects for senior homes. According to a survey conducted in late August by Marcus & Millichap in collaboration with National Real Estate Investor, 55 percent of investors consider now the time to buy senior housing assets, trumping all other property types, while 76 percent of investors in the sector believe the value of the properties in their portfolio will grow 12 months from now.