Senior Housing Cap Rates 2026: National & State-Level Breakdown
By SeniorCRE Investment Research Team
What this article explains:
- •Topic: Complete 2026 cap rate analysis across all senior housing property types and geographic markets
- Who this is for: Real Estate Investors, Private Equity Firms, REITs, Family Offices, and Investment Analysts
- Problems addressed: Inaccurate deal underwriting, market mispricing, lack of regional benchmarks, and missed investment opportunities
- Systems involved: Investment analysis tools, property valuation models, market comparison databases, and underwriting software
- Why this matters now: Cap rates range from 6.0% to 17.0% depending on property type, class, and location—accurate data is critical for investment decisions
Key Insight
Senior housing cap rates in 2026 range from 6.0% (Class A Independent Living, 50+ units, metropolitan) to 17.0% (Class C Skilled Nursing, under 20 units, rural), reflecting significant variation based on property type, class, size, and location. Understanding these dynamics is critical for accurate underwriting and portfolio allocation.
Capitalization rates (cap rates) remain the fundamental metric for evaluating senior housing investment returns. This comprehensive analysis breaks down 2026 cap rate data across all major property types, asset classes, and geographic markets to help investors benchmark deals and identify opportunities.
Understanding Senior Housing Cap Rates
What Is a Cap Rate?
The capitalization rate (cap rate) measures the annual net operating income (NOI) a property generates relative to its purchase price or current market value. It's expressed as a percentage and calculated as:
Cap Rate = (Net Operating Income / Property Value) × 100
A 9.0% cap rate on a $10 million assisted living facility means it generates $900,000 in annual NOI. Cap rates inversely correlate with property values—higher cap rates mean lower prices (and vice versa).
Why Cap Rates Matter in Senior Housing
Cap rates serve three critical functions for senior housing investors:
- Valuation Benchmark: Compare properties across markets and segments
- Return Expectation: Gauge unlevered cash-on-cash returns
- Risk Assessment: Higher cap rates typically signal higher operational or market risk
Important Context
Cap rates reflect stabilized NOI and assume normalized occupancy, expenses, and operations. Properties in lease-up, requiring repositioning, or experiencing operational distress trade at higher cap rates due to additional risk and value-add opportunity.
National Cap Rate Averages by Property Type
The following tables present 2026 national cap rate ranges across all major senior housing property types, organized by asset class and property size. Data reflects stabilized transactions in metropolitan markets.
Independent Living (IL)
| Asset Class | Up to 20 Units | 20-50 Units | 50+ Units |
|---|---|---|---|
| Class A (< 10 years) | 7.5% - 8.5% | 6.75% - 8% | 5.5% - 6.75% |
| Class B (10-25 years) | 8.75% - 9.75% | 8% - 9% | 6.75% - 7.75% |
| Class C (> 25 years) | 10.25% - 12% | 9.5% - 10.75% | 8.25% - 9.25% |
Key Insight: Independent Living offers the lowest cap rates (highest valuations) in senior housing due to lower operational intensity, favorable resident demographics, and strong demand fundamentals.
Assisted Living (AL)
| Asset Class | Up to 20 Units | 20-50 Units | 50+ Units |
|---|---|---|---|
| Class A (< 10 years) | 9% - 10.25% | 8% - 9.25% | 7% - 8.25% |
| Class B (10-25 years) | 10.25% - 11.75% | 9.25% - 10.5% | 8.25% - 9.25% |
| Class C (> 25 years) | 12.25% - 14% | 11.25% - 12.75% | 9.75% - 10.75% |
Key Insight: Assisted Living cap rates average 150-200 basis points higher than IL due to increased care staffing, regulatory complexity, and operational intensity.
Memory Care (MC)
| Asset Class | Up to 20 Units | 20-50 Units | 50+ Units |
|---|---|---|---|
| Class A (< 10 years) | 9.5% - 10.75% | 8.75% - 10% | 7.5% - 8.75% |
| Class B (10-25 years) | 10.75% - 12.25% | 10% - 11.25% | 8.75% - 9.75% |
| Class C (> 25 years) | 12.75% - 14.5% | 11.75% - 13.25% | 10.25% - 11.25% |
Key Insight: Memory Care commands premium rents but trades at higher cap rates than AL due to specialized care requirements, staff-to-resident ratios, and liability exposure.
Skilled Nursing Facilities (SNF)
| Asset Class | Up to 20 Beds | 20-50 Beds | 50+ Beds |
|---|---|---|---|
| Class A (< 10 years) | 12.5% - 13.75% | 11.5% - 12.75% | 9.5% - 10.75% |
| Class B (10-25 years) | 13.75% - 15.25% | 12.75% - 14.25% | 10.75% - 11.75% |
| Class C (> 25 years) | 15.75% - 17.5% | 14.75% - 16.25% | 12.25% - 13.25% |
Key Insight: SNF properties trade at the highest cap rates (lowest valuations) due to Medicare/Medicaid reimbursement exposure, regulatory burden, and operational complexity requiring specialized operators.
CCRC / Life Plan Communities
| Asset Class | Up to 20 Units | 20-50 Units | 50+ Units |
|---|---|---|---|
| Class A (< 10 years) | 10% - 11.25% | 9% - 10.25% | 7.5% - 8.75% |
| Class B (10-25 years) | 11.25% - 12.75% | 10.25% - 11.75% | 8.75% - 9.75% |
| Class C (> 25 years) | 13.25% - 15% | 12.25% - 13.75% | 10.25% - 11.25% |
Key Insight: CCRCs/Life Plan Communities offer stable, diversified revenue but trade at elevated cap rates due to structural complexity, entrance fee accounting, and actuarial risk management requirements.
Property Size Impact on Cap Rates
Cap rates compress significantly as properties scale from small (under 20 units) to large (50+ units) due to operational efficiency, institutional investor demand, and economies of scale.
Under 20 Units
+200-350 bps
Small properties trade at cap rate premiums due to limited buyer pools, operational inefficiency, and difficulty achieving institutional scale.
20-50 Units
+75-150 bps
Mid-size properties represent the "sweet spot" for regional operators—large enough for efficiency, small enough for hands-on management.
50+ Units
Baseline
Large properties achieve lowest cap rates (highest valuations) due to institutional investor demand, operational leverage, and strong NOI stability.
Scale Matters
A Class A Assisted Living facility with 60 units in a metropolitan market may trade at 7.5-8.5%, while an identical property with only 15 units could trade at 9.5-10.5%—a 200 basis point premium driven purely by property size and buyer demand dynamics.
State & Regional Cap Rate Adjustments
Geographic location significantly impacts cap rates. Properties in major metropolitan statistical areas (MSAs) command the lowest cap rates, while rural markets trade at substantial premiums due to demand risk, exit liquidity, and operational challenges.
| Location Type | Under 20 Units | 20-50 Units | 50+ Units |
|---|---|---|---|
| Metropolitan Markets | +-0.25% | +-0.25% | +-0.25% |
| Suburban Markets | +0.5% | +0.25% | +-0.25% |
| Rural Markets | +1.25% | +0.75% | +0% |
High-Demand States (Compression Markets)
States with strong demographic fundamentals, favorable business climates, and high senior population growth experience cap rate compression:
- Florida: -25 to -50 bps (Sun Belt retirement magnet, no state income tax)
- Arizona: -25 to -50 bps (Phoenix/Scottsdale MSA growth, favorable climate)
- Texas: -25 to -40 bps (DFW, Houston, Austin growth, business-friendly)
- North Carolina: -20 to -40 bps (Research Triangle, Charlotte growth)
- Georgia: -20 to -35 bps (Atlanta MSA expansion, lower cost of living)
Supply-Constrained Markets (Premium Pricing)
Markets with limited senior housing inventory, restrictive zoning, or high barriers to entry support lower cap rates:
- California (Coastal): -50 to -75 bps (Bay Area, Southern California supply constraints)
- New York (Metro): -40 to -60 bps (NYC/Long Island limited new supply)
- Massachusetts: -30 to -50 bps (Boston metro, high regulatory barriers)
- Washington (Seattle): -30 to -45 bps (Puget Sound limited inventory)
Secondary & Tertiary Markets (Expansion)
Smaller MSAs, rural areas, and markets with slower growth or declining populations trade at cap rate premiums:
- Rust Belt States: +50 to +100 bps (Ohio, Michigan, Pennsylvania outside major metros)
- Rural Midwest: +75 to +150 bps (Iowa, Kansas, Nebraska non-metro markets)
- Declining Population States: +50 to +100 bps (West Virginia, Mississippi rural areas)
2026 Market Trends & Investment Implications
Cap Rate Compression Drivers
Several macroeconomic and sector-specific factors are driving cap rate compression (lower rates, higher valuations) in 2026:
- Demographic Tailwinds: 10,000+ Baby Boomers turning 65 daily through 2030
- Institutional Capital Inflows: REITs, private equity, and foreign investors increasing senior housing allocations
- Interest Rate Stabilization: Fed rate cuts improving debt financing costs
- Operational Maturity: Technology adoption and staffing strategies improving NOI margins
Expansion Drivers (Higher Cap Rates)
Conversely, certain property types and markets are experiencing cap rate expansion due to risk factors:
- Skilled Nursing Exposure: Medicare reimbursement pressure and regulatory burden
- Rural Market Risk: Limited senior populations, staffing challenges, exit liquidity concerns
- Class C Properties: Deferred maintenance, obsolescence, and repositioning capital requirements
- Oversupplied Markets: Phoenix, Denver, Dallas submarkets with excessive new development
Investment Strategy Implications
Defensive Positioning
- • Class A/B IL & AL in major metros (6-9% cap rates)
- • 50+ unit properties for operational leverage
- • Stabilized assets with institutional-quality operators
- • Markets with strong senior population growth
Value-Add Opportunities
- • Class B/C properties requiring repositioning (10-14% cap rates)
- • Small properties in undersupplied suburban markets
- • Distressed SNF assets with strong operator sponsors
- • Secondary markets with demographic inflection points
Underwriting Considerations
When evaluating senior housing acquisitions, adjust your cap rate assumptions based on:
- Property Type & Class: Apply appropriate base cap rate from national averages
- Property Size: Add 75-350 bps for properties under 50 units
- Geographic Location: Apply metropolitan/suburban/rural adjustments
- State-Specific Factors: Adjust for supply/demand dynamics and regulatory environment
- Property-Specific Risk: Increase cap rates for deferred maintenance, operator quality, or census challenges
Conclusion
Senior housing cap rates in 2026 span a wide spectrum—from 6.0% for institutional-quality Independent Living in gateway markets to 17.0% for small rural Skilled Nursing properties. Understanding these dynamics is critical for accurate deal underwriting, portfolio construction, and return expectations.
Investors should recognize that cap rates reflect market pricing at a specific moment in time and must be contextualized within broader investment theses: growth potential, operational upside, demographic tailwinds, and exit strategy. Properties trading at higher cap rates often present value-add opportunities for experienced operators willing to reposition assets and improve operations.
As institutional capital continues flowing into senior housing and demographic trends accelerate, expect continued cap rate compression in high-quality IL/AL assets in supply-constrained markets. Conversely, skilled nursing and small rural properties will likely maintain elevated cap rates due to structural challenges and limited buyer demand.
Ready to evaluate senior housing acquisitions with precision?
SeniorCRE provides institutional-grade underwriting tools, property-level cap rate comparables, and market intelligence to help investors make data-driven acquisition decisions. Schedule a platform demo to see how we support senior housing investment workflows.
Underwrite Senior Housing Deals with Confidence
Access real-time cap rate data, property comparables, and AI-powered underwriting tools on SeniorCRE®'s investment platform.
Schedule a Demo