By Hayden Spiess
DALLAS — Even those in their golden years are not immune to climbing rates of marriage dissolution. The divorce rate among couples wherein one of the spouses is age 50 or older — a phenomenon sometimes termed a “gray divorce” — has risen to 40 percent, according to data from the National Investment Center for Seniors Housing & Care (NIC).
Though a bleak statement on the marital landscape, this fact has been one of the elements bolstering occupancy within the growing active adult subsector of seniors housing, says Caroline Clapp, a senior principal at NIC.
Clapp’s comments came during a special “data dive” presentation at the 5th annual InterFace Active Adult conference, a daylong event that took place on Wednesday, May 7, at The Westin Las Colinas in Dallas.
“We’ve got this rise in solo aging among unmarried older adults,” reported Clapp. “That’s pushing this demand for downsizing, or rightsizing.” Clapp pointed out that this is just one of the factors that has led the demographic of people ages 65 to 74 to claim the distinction of the fastest growing cohort of renters.
Booming Wealth
On a brighter note, contemporary seniors are also seeing increases in their net worths, another important component in driving demand for active adult communities, which typically charge a premium in comparison to traditional multifamily properties. On average, active adult communities charge a rent premium of 20 percent relative to conventional multifamily, according to Clapp.
Clapp stated that aggregate net worth went up for almost all generations between 2019 and 2022 but grew the most for the baby boomer generation, which saw median net worth rise from a little under $300,000 per household to over $400,000. “This does show an increased ability to pay the rent premiums that we’re talking about compared to traditional or conventional multifamily,” explained Clapp.
Though Clapp pointed out that the active adult subsector remains relatively small in comparison with multifamily or even the broader senior living industry, the growing demand for this property type is reflected in the amount of newer inventory — roughly 30 percent of existing active adult developments were opened within the past four years.
Occupancies are also strong across stabilized active adult properties, according to Clapp, who shared that these communities have an occupancy level of nearly 96 percent on average.
Not All Markets Are Created Equal
Regionally, there are some differences in the degree to which active adult is experiencing and meeting the new wave of demand, said Clapp. The number of units is highest in the Northeast region of the United States, followed by the Pacific and Southwest regions.
More specifically, Clapp identified the 10 largest markets for active adult (in order by percent of inventory) as: Dallas, Los Angeles, Minneapolis, New York, Las Vegas, Houston, Phoenix, San Diego, Buffalo and Austin.
Rental rates vary across markets as well. According to the data reported by NIC, median average monthly rent is highest in Miami, at $3,500. Portland, Oregon; Chicago; Washington, D.C.; and New York City also see median average monthly rents above $3,000.
Despite the growing demand for active adult product that is reflected in these strong rental rates and the newer inventory, Clapp pointed out that there is still work to be done on the education front.
Speaking of fellow conference attendees, Clapp said that she “heard a lot that resources are needed to explain what active adult is to capital providers.”
If attendance at the conference itself is any indication though, there is reason for optimism on that front. Dedicated purely to topics within the active adult subsector, the event drew more than 300 industry professionals.