Senior housing occupancy just hit 88.7 percent nationwide. This number nearly matches pre-pandemic highs. But the recovery is deeply uneven. Large metro areas are stabilizing. Mid-size cities are absorbing new units faster than developers can build them.
Investors entering this space face a fundamental question: Should you invest in proven, predictable markets, or should you target areas with faster growth but less certainty?
The answer depends on understanding the real differences between primary and secondary markets in senior living. You need to know more than just their definitions. You need to know how they actually behave.
What Primary and Secondary Markets in Senior Living Actually Mean
The basic difference is simple. Primary markets are the largest and most established metros. Secondary markets are the next tier down.
Primary Markets: The Big 31
Primary markets are the 31 largest U.S. metropolitan areas tracked by senior housing data providers like NIC MAP. These include New York, Los Angeles, Chicago, Dallas, and Boston.
Population size alone doesn’t make them “primary.” They earn this status because they have:
- Deep Transaction History: Dozens of senior living communities have sold multiple times. That creates reliable pricing benchmarks.
- Institutional Capital: REITs, pension funds, and national operators compete actively.
- Established Networks: Experienced senior living operators work in these markets. So do specialized contractors and senior living consultants.
- Rich Data: You can pull 10 years of occupancy trends, rent growth, and absorption rates with confidence.
The trade-off: Everyone else knows this, too. Land costs more. Competition is fierce. A new assisted living community in suburban Chicago might face five direct competitors within three miles.
Secondary Markets: The Next 68
Secondary markets rank 32 through 99 in senior housing inventory and transaction volume. Think Raleigh, Louisville, Boise, Knoxville, and Des Moines. These are mid-tier metros.
These markets have:
- Thinner Data: Maybe only five to ten senior living sales in the past three years.
- Less Institutional Attention: Regional operators dominate. National players are just starting to enter.
- Fewer Comparable Projects: You might be the first to build a specific product type in that submarket.
- Lower Costs: Land, labor, and permitting are usually 20 to 40 percent lower than in primary markets.
The trade-off: You’re making decisions with less information. The feasibility study could be wrong. There’s no safety net of organic demand to bail you out. Exit options are limited. Selling a 90-unit community in Boise takes longer than selling the same asset in Seattle.
Why This Matters More Than You Think
Let’s say you’re evaluating two properties:
Property A: 120-unit assisted living building in suburban Dallas (primary market)
- Purchase price: $28 million
- Occupancy: 91%
- Rent growth: 3.2% annually
- Competition: 6 comparable buildings within 5 miles
- Lender options: 12 active senior housing lenders in the market
Property B: 90-unit assisted living building in Knoxville (secondary market)
- Purchase price: $16 million
- Occupancy: 86%
- Rent growth: 5.8% annually
- Competition: 2 comparable buildings within 5 miles
- Lender options: 4 lenders active in the market
While Property A offers stability and easier financing, Property B provides higher growth potential and a lower entry cost. Neither is “better.” They serve different investment strategies. A pension fund seeking stable income picks Dallas. A regional operator with local expertise and higher risk tolerance picks Knoxville.
Current Market Fundamentals: What’s Actually Happening
All 31 NIC MAP primary markets exceeded 85 percent occupancy in Q3 2025. Boston leads at 92.6 percent, followed by San Francisco at 90.9 percent and Baltimore at 90.6 percent. Markets are recovering steadily but face new construction that will pressure rates through late 2026.
Secondary markets are recovering faster. In 2024, fewer than 10,000 construction starts occurred across primary and secondary markets combined. It represents a nearly 40 percent year-over-year decline and the lowest annual total since 2009. Absorption outpaced new inventory by 2.7 to 1 across these markets.
Demand is growing faster than supply. That drives occupancy up and gives operators pricing power. This imbalance won’t last forever. The window for early-mover advantage is open now but closing.
How to Actually Decide Where to Invest
Use measurable indicators instead of assumptions. Consider these filters to evaluate any market:
Demographics (The Non-Negotiable Foundation)
Pull census data and focus on two numbers:
- Start with the current population aged 75-plus. That is your immediate market. Senior living demand accelerates sharply at 75. It peaks at 82.
- Next, look at projected growth in the 80-plus population over the next seven years. That tells you if demand will outpace today’s supply.
The global population aged 80 and above will triple from 2020 to 2050, reaching about 426 million.
Penetration Rate (The Supply-Demand Reality Check)
Calculate this: (Total senior housing units in market) ÷ (Total population 75-plus).
A healthy penetration rate runs between 8 and 12 percent. It varies based on income levels and local preferences. A market with 15 percent penetration is likely too late. You need a differentiated product to compete.
Below 6 percent? The market is probably underserved. That assumes demographics and incomes support senior living.
Occupancy Trends (The Momentum Indicator)
Don’t just look at current occupancy. Pull the trailing four quarters and check for consistent improvement. A market that went from 82% to 84% to 86% to 88% over four quarters shows real momentum. A market stuck at 87% for six quarters is treading water.
Primary markets should hold above 88 percent to justify new development. Secondary markets can support new projects at 85 percent if absorption is strong.
Rent Growth vs Construction Costs (The Returns Filter)
New buildings command a premium over existing stock. In primary markets, that premium averages 19 percent. In secondary markets, it’s about 11 percent.
Ask yourself this question: Can you capture enough rent growth to justify your land and construction costs? You might pay primary-market land prices but only capture secondary-market rent premiums. If that happens, your returns will disappoint.
Cross-check this with construction costs. A metro’s construction cost index might rise faster than rent growth. Delay or reconsider in that case.
Financing and Exit Liquidity (The Reality Test)
Call three senior housing lenders. Ask if they’re active in your target market. None are active? They require 40 percent down instead of the usual 25 to 30 percent? You’re in a market with liquidity risk.
Check transaction comps too. The market should show at least three senior living sales over the past 18 months. Fewer than that means your exit will be harder to execute. That is fine if you’re planning to hold for ten-plus years. It’s dangerous if your fund has a five-year horizon.
FAQs About Primary vs Secondary Markets in Senior Living
How many primary markets exist?
Thirty-one metro areas form the official senior housing primary list.
What makes a market “secondary”?
It ranks 32nd to 99th in inventory and transaction activity within industry-tracking systems.
Which market type offers better ROI?
Primary markets offer stability, while secondary markets can outperform in yield when timed well.
Where can I find current data?
Reliable sources include NIC MAP Vision, Lument, AEW Research, Fannie Mae, and Cushman & Wakefield.
Should portfolios include both?
Yes. Combining both spreads risk and captures growth at different points of the cycle.
Partner with Canopy Senior Living
At Canopy, we help senior living investors and operators translate data into smart expansion strategies. Our analysts track occupancy, rent, and construction trends across all markets. We guide clients through feasibility, site selection, and capital planning for both primary and secondary markets.
Contact us today to discuss your next senior living project.