A trend I have been following for some time is the shift in demographics worldwide or more specifically, the growth in seniors coupled with the fall off of birthrate in virtually all first-world countries. On this subject, a new report from the Joint Center for Housing Studies at Harvard University caught my attention. New Projections Anticipate a Slowdown in Household Growth and Housing Demand | Joint Center for Housing Studies
I’ve written on this subject numerous times on this site namely, how a shifting demand is changing housing and healthcare demand while creating problems from a care delivery perspective. To be succinct, and this is happening in “living color” in Japan, an aging population combined with a shrinking birth rate leads to significant economic and healthcare problems not readily solved by immigration policy alone. Friday Feature: The Economic Impact in Aging Countries – Reg’s Blog
In the United States, the number of births decreased 3 percent from 2022, according to data collected by the Centers for Disease Control (CDC), dropping the rate down to 1.6 births per woman over the course of her lifetime. This level is well below the rate required to keep the US population at replacement levels. In short, not including immigration, the U.S. population is shrinking and the rate of worker support to entitlement beneficiary has decreased such that at current levels, programs like Social Security and Medicare, without significant change, are set to go bankrupt.
- 2023 birth rates
- declined for women ages 20–39 years
- were unchanged for females aged 10–14 and 40–49.
- The birth rate for teenagers aged 15–19 was down 3% in 2023 to 13.2 births per 1,000 women.
- The birth rate for women ages 20–24 (55.4) reached a record low.
- The cesarean delivery rate increased for the fourth year in a row to 32.4% in 2023; the low-risk cesarean delivery rate increased to 26.6%.
- The preterm birth rate was essentially unchanged at 10.41%.
According to the Harvard projections, the number of households in the US is expected to increase by 8.6 million, or approximately 860,000 per year between 2025 and 2035. This is far less growth over the next ten years than in recent decades, including the near-stagnant 10.1 million households added post the Great Recession in the 2010s. The pace of growth is expected to slow between 2035 and 2045 to a gain of just 5.1 million households, which would be less growth than in any decade of the last 100 years.
One of the most important trends is the growth in the number of older adult households. The oldest baby boomers are turning 80 in 2026, and the number of households headed by a person aged 80 or older will rise almost 60 percent in the next ten years. This is an increase of almost 6 million households. This aging progression leads to an historic number of older adult households, bringing an extraordinary need for housing and services, combined with ever higher numbers of households lost each year from aging or mortality that drives down net household growth.
One of the more interesting senior housing/senior living trends present is the increase in occupancies with a stronger revenue trend (rate) as a result of almost historic low levels of new unit development. The absorption of existing units post the pandemic has been a plus to Independent, Assisted, and Life Plan organizations and lesser so, to nursing care/SNF organizations. Essentially, due to an aging demographic, demand for senior living and care has steadily increased while the supply of available units has remained flat to only marginally greater.
What the Harvard study does is pose an interesting outlook, one where the supply of non-senior specific units, if development were to ramp-up, could in the near to mid future, exceed demand. The number of younger households grows far more slowly than historically experienced. This slowdown will be driven mainly by an increased number of older adult households that are lost or consolidated each year. Households will still form, many of them by a more diverse set of younger adults, but not enough to outweigh the rising number of households lost. In short, as older adult households turn, assuming a transition to senior living settings, general inventory increases.
The dilemma, at least to me, is gauging the actual senior housing demand in terms of setting and units. Still today, 97% of seniors live in their own homes or with family. Though a demand for specialized living settings will increase, the challenge that primarily arises is “what kind of demand (?)”. To be certain, and this is an economic subject I have written and lectured about extensively, demand for senior housing/senior living is highly elastic. Affordability or price, in other words, is a major condition in gauging the kind of supply that is not only wanted but needed. For reference, here’s and oldie but a goodie: https://rhislop3.com/2014/11/19/the-demographic-realities-of-seniors-housing-and-healthcare/