Inside The Good And Bad News About Senior Living Penetration Rates In 2026

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Senior living market penetration rates are influenced by more than just economics and demographics, new data and analysis from the National Investment Center for Seniors Housing and Care (NIC) shows.

Senior living operators often see product types like assisted living and memory care as needs-based, meaning that residents move in because they need a higher level of care. Interestingly enough, despite the advantages of assisted living in attracting needs-based residents, the NIC report showed that one-third of the top 99 markets in the U.S. defy the assumption that higher care needs alone lead to higher penetration rates.

The new data “shows that penetration rate growth requires education, pricing transparency, workforce investment and policy engagement,” NIC Senior Principal Omar Zahraoui told me earlier this week.

I think there is an important lesson for operators in that simply offering certain services or planting a flag in certain markets likely won’t be enough to grow penetration rates beyond where they are today.

The good news for the senior living industry is that there are already markets and operators that I think exemplify what it will take to expand services to more older adults in the future. In the report, the researchers mentioned locales in the Pacific Northwest, like Portland, Oregon; and elsewhere, like in Lancaster, Pennsylvania; that have outsized penetration rates compared to the rest of the country. That is a factor of local exposure and wider education of senior living, among other things.

And new ideas are percolating with the goal of increasing frozen senior living market penetration rates. In January, industry veterans Formation Capital CEO and Founder and Executive Chairman of the Senior Living Transformation Company (SLTC) Arnold Whitman and Vitality Society Founder Meredith Oppenheim launched a framework aimed at increasing senior living adoption nationwide.

In a nutshell, they believe that operators will have to shift their priorities from occupancy and margins to a more resident-centric view of improved health outcomes of residents, access to services and affordability, trust and technology.

As Oppenheim said during a webinar earlier this year, the industry “can no longer wait” to evolve its approach to penetration rates. The boomers already are here, and even more of them are on the way.

The bad news is that the current anemic state of development means that penetration rates may well shrink from where they are today, if communities substantially fill up and older adults have fewer options.

In this week’s members-only, exclusive SHN+ Update, I analyze recent reports and data on penetration rates to offer the following takeaways:

• Inside new efforts to grow penetration rates
• Why the answer might lie in markets with consistently high penetration rates
• Why national penetration rates might be on the downswing no matter what the industry does 

New efforts to grow penetration rates focus on residents

As the NIC researchers found, a multitude of factors – many of them more nuanced than economic or demographic forces – lead to higher penetration rates in certain markets. There are multiple senior living stakeholders taking that into account and aiming to change senior living penetration rates in the years to come through more than just taking an if-you-build-it-they-will-come approach.

Among them is the “VITALS” model from Whitman and Oppenheim. VITALS, which stands for value, inclusion, trust, agency, longevity and systems. As the name implies, the model is a spin on the traditional senior living offering in that it puts residents at the center of operational decisions. Ultimately it was built to “reinvent senior housing for residents and returns,” the duo said during a January webinar.

Senior living operators usually measure success in occupancy or their ability to make a good margin. But all of that flows from the resident experience in the end. That is why the VITALS seeks to reorient operators to measure a different KPI, their impact on residents. Instead of focusing solely on things like move-ins and move-outs, operators should track the metrics that “truly matter” such as mobility, cognition and resilience, according to Whitman and Oppenheim.

“Senior housing is uniquely positioned to measurably and meaningfully improve outcomes and even extend its reach and impact beyond its buildings,” they wrote in a report about the model. “The long-anticipated surge in demand has arrived — but the industry’s readiness remains uncertain.”

Both the NIC researchers and the veterans behind VITALS agreed that increasing senior living penetration rates must better align older adults and their families, operators and operators, technology partners, investors, payers and government-funded entities like Medicare and PACE.

Indeed, “penetration rate growth requires education, pricing transparency, workforce investment and policy engagement,” NIC Senior Principal Omar Zahraoui told me. “The biggest takeaway is that penetration is not determined by demographics or socioeconomics alone. Markets with strong wealth and income profiles among adults aged 75 and better do not automatically achieve higher penetration.”

“Penetration grows when these factors move in the same direction. It stalls when even one falls out of sync,” he added

The VITALS report showed there is much that operators can do that would help increase penetration rates in the years to come. Among the biggest ways the industry could do that is by creating more truly middle-market services, something it has so far not done at scale.

“In order for us to succeed and to move to this middle market, we need to be more creative in how we look at unbundling and decoupling these services and looking at them in more efficient ways, both from a staffing and cost perspective, all with the goal to reduce the rates and make the industry more accessible and affordable,” Oppenheim said during the VITALS webinar.

I also think the answer lies in markets with historically high penetration rates for senior living, such as in Portland, Oregon or Minneapolis, Minnesota. In those markets, senior living residents are thought to have a better understanding of senior living, why they might need it and how much it costs. Therefore, they are more amenable to living in senior living communities when the time comes.

I think about how operators located in those markets, such as RoseVilla Senior Living in Portland, are focused on connecting with residents sooner in their aging journeys through programs like TakeRoot, which offers people on the community’s waitlist paid services ranging from planning resources to full access to the community and its amenities.

I also think about markets like Lancaster, Pennsylvania, where multiple nonprofit operators work in a form of “co-opetition” that helps them all succeed. These operators take a resident-centric approach to their operations, even going so far as to mutually organize events happening across multiple communities.

“Ultimately, penetration is a collective measure of progress. It is not an asset-level metric like occupancy,” Zahraoui told me. “It reflects how well an entire ecosystem – operators, investors, policymakers and educators – enables older adults to adopt assisted living earlier and more confidently.”

In the end, I also think operators should focus more on developing a similar kind of ecosystem in their own markets. Although easier said than done, senior living companies should lay the groundwork for these plans immediately, if they have not done so already.

Development still a huge factor in national penetration rates

In the end, the fate of senior living penetration rates may well rest with development – or the lack thereof.

Penetration rates are simply the measure of how many age- and income-quality adults live in a senior living community. While there is much operators can do to increase penetration rates locally, the math equation may not be as favorable nationally given the weak state of new development.

Average occupancy is on the rise in 2026, but that is partly a factor of the limited number of newly opened communities. New inventory growth remained below 1% of total inventory in the fourth quarter of 2026, according to the latest NIC data.

Occupancy is rising fast enough that prospective residents may start having trouble finding a unit of their choice in the coming months and years, according to Lisa McCracken, NIC’s head of research and analytics.

And again, this is all a math problem. As the number of baby boomers over 80 grows this year, they will have fewer communities to choose from if the rate of new development does not substantially increase. A greater number of people over 80 and fewer communities to choose from would mathematically send penetration rates falling from where they are today.

According to the 2025 NIC report on penetration rates, demand is currently so high that the industry will need to develop at nearly double its historical maximum development pace just to keep its 90% occupancy level by 2030. In 2026, I still don’t see that math equation working out as inventory growth remains near historic lows.

A 2025 Green Street report on the senior living industry predicted that the senior living industry’s penetration rate will likely register between 7.5% and 8% by 2029 as “poor development economics today suggest that demand growth should outstrip supply growth by a sizable margin over the next five years.”

To me, the bottom line of all of this is that the industry may not be able to do much to increase penetration rates if it cannot increase new development. I still think the senior living industry should try to build a more resident-centric model simply because it’s good for residents, and that better serving them should serve as operators’ north star in the coming years. Even if they can’t increase penetration rates, I still think that operators that attempt to will land on models that give them advantages in the years to come. For that reason alone, it’s worth doing.

The post Inside the Good and Bad News About Senior Living Penetration Rates in 2026 appeared first on Senior Housing News.