THE OPPORTUNITY
A massive demographic shift is underway in the United States which will see the older population with significant increases to 70 million people by 2030, from its current 40 million, when more than 20% of the U.S. population will be over the age of 65.
The 70+ population is expected to grow faster than any other age group from 28 million in 2010 to 53 million by 2030. America’s most senior demographic, age 85 and over, is anticipated to grow more than 3-fold, from 5.5 million in 2010 to 19 million by 2050.
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Seniors are living longer due to healthier lifestyles and better access to healthcare with an increasing number living alone. Life expectancy is 79 years in the United States and is expected to continue to increase. According to the National Center for Assisted Living, the largest market segment in the industry are elderly people who live alone, particularly those who have no children, driving increased demand for services historically provided by spouses or other family members.
Industry analysts are forecasting a supply-demand imbalance based on demographic changes with the nation’s senior population. A recent study analyzed the supply of senior housing units needed to satisfy demand from the anticipated change in demographics. On average, 18,000 new Independent Living (IL) and Assisted Living (AL) units were needed each year to meet demand during the period 2010 to 2015 and more than 25,000 from 2015 to 2020. By comparison, about 10,000 units were delivered in each of the years 2012 and 2013. The demand-supply gap is on track to accelerate its divergence until the year 2060 as the increase in the population of the 80+ demographic significantly outpaces the increase in senior living units supplied representing an excellent opportunity.
As a result of seniors living longer, issues related to acuity will force greater demand for skilled housing. Memory care
is viewed as a growth area for senior housing operators. According to statistics reported by the Alzheimer’s Association, 5 million people age 65 and older have Alzheimer’s disease. By 2025, that number is estimated to reach 7.1 million, and will triple to 13.8 million by 2050. That translates to more than 15% of the 65+ demographic having an Alzheimer’s diagnosis within the next forty years. Cost of care is also rising. The Alzheimer’s Association estimates that spending on Alzheimer’s care will grow from $127 billion in 2010 to $1.08 trillion by 2050.