The seniors housing sector has experienced its strongest year in a decade, with rolling four-quarter transaction volume reaching $24 billion by year-end 2025, the highest level since Q2 2015 according to JLL’s 2026 Seniors Housing and Care Investor Survey and Trends Outlook.
The robust performance reflects improving market fundamentals and growing investor confidence in the sector's trajectory. Occupancy rates have rebounded to 89.9 percent in primary markets and 90 percent in secondary markets as of Q4 2025, marking 19 consecutive quarters of positive absorption since the pandemic.
Additionally, outside of major West Coast cities, most markets have fully recovered to pre-pandemic occupancy levels.
“The seniors housing sector is experiencing a powerful convergence of favorable conditions," Bryan Lockard, executive managing director and head of Healthcare & Alternative Real Estate at JLL Value & Risk Advisory, said in a release. "Strong fundamentals, constrained supply, and unprecedented demographic tailwinds are driving renewed investor interest and transaction activity."
Cap rates compress as investor sentiment shifts
Market sentiment has shifted decisively toward cap rate compression, with average seniors housing cap rates decreasing to 6.2 percent in Q4 2025. Notably, 85 percent of survey respondents expect cap rates to decrease further over the next 12 months – a significant increase from 57 percent just one year ago.
JLL also suggests cap rates are spreading to the 10-year U.S. Treasury have compressed to 210 basis points, down from the sector's long-term average of 416 basis points, continuing to highlight the yield premium that seniors housing commands.
Supply constraints and strong demand drive rent growth
New construction starts have declined 77 percent in primary markets and 62 percent in secondary markets from recent peaks, consistently falling below the past 10-year averages. This supply constraint, combined with robust demand, has driven seniors housing rents to grow 28.8 percent from pre-COVID levels to an average of $5,479 monthly.
"The dramatic slowdown in new construction is creating a favorable supply-demand imbalance that's driving strong performance for existing properties," Lockard said. "This dynamic is particularly attractive to investors seeking stable, income-generating assets."
Demographic wave creates long-term demand
The sector benefits from powerful demographic tailwinds, with the U.S. 80-plus population projected to grow 36.6 percent over the next decade, from 14 million to 19 million, compared to just 5 percent total population growth. More than 10,000 Americans turn 65 daily, creating unprecedented long-term demand for seniors housing facilities.
Investor appetite intensifies
Reflecting growing confidence in the sector, 86 percent of survey respondents indicated they are seeking to increase their seniors housing exposure in 2026, up 10 percent from last year and only 4 percent are looking to decrease exposure. Assisted living emerged as the most targeted investment opportunity, cited by 40 percent of respondents, followed by independent living at 29 percent.
Private capital accounted for 50 percent of transactions by volume in 2025, slightly down from 2024, with REITs and public buyers representing 32 percent, up from 24 percent in 2024. The sector continues to gain traction as a leading alternative investment class, with alternatives' share of total commercial real estate transaction volume reaching a decade-high of 16.2 percent in 2025.
Price per unit valuations have also strengthened, with seniors housing reaching $182,800 per unit – a 29 percent year-over-year increase.
The report noted that typical marketing time for seniors housing assets has remained stable at six months, with 67 percent of respondents citing this timeframe, reflecting investor willingness to move quickly on opportunities.
While challenges remain around economic volatility and workforce availability, cited as top concerns by 29 percent of respondents each, the sector's recovery trajectory and structural advantages position it favorably for continued growth. With transaction momentum accelerating, valuations strengthening and investor sentiment overwhelmingly positive, the seniors housing sector is poised for sustained outperformance as it enters a new phase of expansion driven by one of the most significant demographic shifts in modern history.