CNBC's Diana Olick joins 'Squawk on the Street' to discuss the rising demand for senior living communities.

The senior housing industry is poised for significant growth as millions of baby boomers approach the age of 80, driving occupancy rates at senior living communities to new highs. Despite this surge in demand, the sector faces a shortage of new supply, with annual inventory growth dropping below 1% and the number of units under construction at its lowest in over a decade.

Deb Cafaro, CEO of Ventus, a major senior living real estate investment trust, notes that investment returns in the sector are strong, with assets being acquired below replacement costs. However, high construction costs and insufficient rental income are discouraging new development. Even with increased building activity, population growth is expected to outpace supply, presenting ongoing opportunities for investors.

Why senior housing could be the next real estate play

Welcome back. The next big real estate opportunity could come from senior living as the industry's on the cusp of a demand boom, especially, specifically a baby boom. Let's get to Diana Olick with this week's property play. Hey, Diana. Hey, Carl. Yeah, more than 4 million boomers will hit 80 in the next five years and occupancy at senior living communities is hitting new highs. I sat down with the CEO of Ventus, a senior living REIT with a $31 billion market cap. You can see the stock up about 14% year to date. Deb Cafaro has been at the helm for more than 25 years. We're buying billions of dollars a year in senior living and we're seeing returns in the sevens going in with low to mid teens on levered IRRs. So there's significant growth in the assets and we're buying below replacement costs. I've never seen that combination of investment characteristics in my long career in real estate. And so we're fully taking advantage of all of that. Annual inventory growth at senior living facilities in Q2 dropped below 1% for the first time since NIC began tracking this in 2006. There were fewer than 22,000 senior housing units under construction in the fourth quarter of last year. That's the lowest in over a decade. The costs of construction labor, the scarcity of construction labor, the cost of materials and rents right now, we know what residents pay to live in our communities really isn't high enough to justify a development return. Cafaro said even if we got the highest level of new development in senior housing that we've ever had, the population growth more than offsets that. You can hear more from Deb Cafaro in our property play video podcast and of course the newsletter. If you haven't signed up, please do. CNBC.com forward slash property play or use that QR code back to you guys. As far as today's data, Diana, were you encouraged by the starts headline or discouraged by the permits headline? I'm going to say I was more interested in the split between single family and multifamily in the data. And that's because we've been seeing this really crazy dynamic in multifamily that for the last two years we've been talking about, oh, there's so much supply, so much supply, record supply, and we're never going to be able to absorb that. And guess what? We are because demand for multifamily has been so strong that we're actually seeing occupancies and rents start to tick up a little bit. And you saw in those numbers today starts on multifamily were the driver of the gains in overall starts. You know, we did see a little bit in the single family starts, but I have to say there's this argument as you were just talking about mortgage rates coming down and will that help? But, you know, Peter Bukvar was on our air this morning and he said, if you have mortgage rates come down, you just get more demand. What we need is more supply, not just from the builders because they can't meet it, but from the existing home market, which we're not seeing. Yeah. Yeah. Peter Bukvar has been all over this. If you can, you can bring rates down and boost demand, but without the supply, they're just going to jack up the price more than offset the benefit. It's a tough, it's a conundrum. Diana, thank you. Diana Olick watching some extraordinary measures in the housing market.

Hamas has agreed to a ceasefire proposal for Gaza, but mediators are still waiting for an official response from Israel. CBS News contributor Robert Berger has the latest from Jerusalem.

Jerusalem

Middle East Conflict

Mediators await Israeli response to Gaza ceasefire proposal

Indian Prime Minister Narendra Modi met China’s top diplomat on Tuesday and hailed the “steady progress” made in improving the bilateral relationship after a yearslong standoff between the nuclear-armed Asian powers.

New Delhi

India's Modi meets China's foreign minister to rebuild ties

Texas Democrats who ended a walkout found themselves shadowed by law enforcement officers to keep them from repeating the protest that stalled Republican efforts to redraw congressional districts and fulfill President Donald Trump's desire to reshape U.S. House maps.

Austin

Police escort Texas Democrats to prevent new redistricting walkout

Air Canada has reached a tentative agreement with the Canada Industrial Relations Board (CIRB), ending the strike that began over the weekend involving 10,000 members and disrupted travel for more than 100,000 travelers per day.

Toronto

Air Canada reaches tentative agreement with flight attendant union

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Hong Kong Island

Ex-Hong Kong lawmaker granted asylum by Australia

Forecasters are giving urgent warnings to millions of people who live along the East Coast as Hurricane Erin churns in the Atlantic. The storm will not make direct landfall but is expected to bring dangerous rip currents.

East Coast of the United States

Hurricane Erin to bring dangerous rip currents to U.S. East Coast

Jasveen Sangha, a Los Angeles woman known as the "Ketamine Queen," has agreed to plead guilty to federal charges in connection with the death of actor Matthew Perry. Sangha could face up to 45 years in prison.

Los Angeles

"Ketamine Queen" to plead guilty in Matthew Perry's death

European leaders who converged on the White House for talks on the Russia-Ukraine war demonstrated a united front regarding Ukraine's security on Monday, underscoring the issue as pivotal for the entire continent, not just Ukraine.

Washington

Ukraine Invasion

EU leaders show cautious optimism following Zelenskyy, Trump talks

As Hamas reportedly agreed to some ceasefire terms that would include the return of more hostages, Israeli Prime Minister Benjamin Netanyahu ordered troops to take more of Gaza.

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President Donald Trump said that the United States would help Europe in providing security for Ukraine as part of any deal to end Russia's war in Ukraine.

Trump tells Zelenskyy U.S. would help with security in a peace deal

Bolivia's presidential vote headed to an unprecedented runoff after elections Sunday that ended more than two decades of left-wing dominance in the Andean nation but signaled voters' trepidation about a major lurch to the right.

La Paz

Bolivia heads to runoff after historic defeat for the left

All Air Canada planes were grounded on Monday (August 18) after its 10,000 flight attendants refused a return-to-work mandate from the Canadian government.

Air Canada delays plans to resume operations

Ukrainian President Volodymyr Zelenskyy arrived at the White House Monday (August 18) for his meeting with President Donald Trump and other European leaders about Russia's war in Ukraine. CBS News White House reporter Taurean Small has more.

Trump meeting with Zelenskiy, European leaders at White House

Hamas on Monday informed mediators that it had accepted a ceasefire deal proposal submitted to it the day before, according to international and Israeli outlets.

Reports: Hamas accepts latest Gaza ceasefire proposal

Hurricane Erin will bring dangerously rough surf to parts of the U.S. East Coast. Over the weekend, Erin's outer bands lashed Puerto Rico with up to 7 inches of rain and flooding parts of the island.

Erin expected to bring dangerous conditions to U.S. East Coast

Ahead of his Monday meeting with President Trump, Ukrainian President Volodymry Zelenksyy says his country will not give up any territory to Russia, even as the White House insists potential land swaps will be necessary. Willie James Inman reports.

Kyiv

Ahead of Trump meeting, Zelenskyy says won't give territory to Russia

Thousands of Israeli protesters demanded a deal to secure the release of hostages still held by Hamas in one of the biggest demonstrations since the war in Gaza began. Debora Patta reports.

Thousands of Israelis protest in Gaza, call for end to fighting

Ukrainian President Volodymyr Zelenskyy flies to Washington on Monday under heavy U.S. pressure to agree to a swift end to Russia's war in his country, but determined to defend Kyiv's interests — without sparking a second Oval Office dust-up with Donald Trump.

Zelenskyy, European allies to meet with Trump to discuss peace

European leaders voiced strong support for Ukraine ahead of a Washington summit with U.S President Donald Trump. They emphasized unity, territorial integrity and security guarantees as essential to any peace deal.

Paris

European leaders stress unity with Ukraine ahead of peace talks

International condemnation and pressure from allies have done nothing to stop Israel's plan to displace the people of northern Gaza. Israel on Saturday (August 16) said it is preparing to move Palestinians from combat zones to southern Gaza.

Israeli military prepares to move Palestinians to southern Gaza

Thousands of people took to the streets on Sunday in a nationwide strike amid fears further fighting could endanger the 50 hostages believed to still be in Gaza.

Tel Aviv-Yafo

Dozens of Israelis arrested in protest to demand end to Gaza war

Russia continues to target Ukrainian cities firing hundreds of missiles and projectiles daily despite ongoing peace efforts, led by the United States. Ukrainian officials say their unwillingness to dial back their offensive reflects their lack of sincere interest in peace.

Five killed as Russia continues to pummel Ukrainian cities

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Anchorage

Trump told Zelenskiy that Putin wants more of Ukraine, source says

Efforts by Texas Republicans to redraw the state's congressional maps got new pushback from protesters at rallies across the country Saturday. Nearly 280 events took place in 34 states, according to organizers.

"Fight the Trump Takeover" protests held across U.S.

West Virginia's governor says he will send up to 400 National Guard troops to the nation's capital at President Trump's request. They'll join other National Guard troops and federal agents already deployed with local police on the streets of Washington, D.C.

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President Trump reversed course Saturday, saying he is no longer seeking an urgent ceasefire in Ukraine, but now agrees with Russian President Vladimir Putin that pursuing a peace deal is the best way to end the war.

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Russian President Vladimir Putin described his meeting with President Trump as "frank, substantive and bringing us closer to making the necessary decisions." But the Alaska summit couldn't have been more far removed from the battlefields of Ukraine.

War-weary Ukrainians desperate for a ceasefire

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Being a Category 1 hurricane, Erin underwent a 'rapid intensification' which helped the storm to grow and strengthen to a powerful Category 5. Hurricane Erin won't make a direct hit on the U.S., but it will produce dangerous surf conditions for the entire East Coast.

San Juan

Hurricane Erin 'rapidly intensifies' to a Category 5

The Washington, D.C., police chief will remain in command of the local force following a settlement with the Trump administration over the federal takeover, but they are required to cooperate with the White House's immigration policy.

Breakdown