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50+ Home Buyers in Prime Spot to Lead Housing Recovery
 Post-World War II baby boomers are in the prime position to lead housing out of its current cyclical downturn, according to panelists participating in an Aug. 12 audio seminar from the NAHB University of Housing, “Get Hesitant Boomers to Buy Now!”
The recent enactment of housing stimulus legislation should convince a significant number of baby boomers that now is the prime time to get off the fence, they added.
“This group is determined to move on with the next phase of their life,” said Chuck Covell, president of Covell Communities in Gaithersburg, Md. “As a result, this segment of buyer is out there looking to make that change and is willing to overlook market obstacles in the way and some of the downtrodden feeling that may be out there,” he said.
“The general feeling is that we just don’t have time to wait until the next cycle comes back,” said Covell.
Seventy-nine percent of the 50+ population owns a home, the highest homeownership rate of any other age group in the U.S., and of those, 67% are mortgage-free, said Rich Carlson, president of Carlson Communications in Northborough, Mass.
“Small, medium or large — even in today’s soft market, active adult builders are selling homes,” said Carlson. But builders “have to do the homework” to ensure that what they are offering is what these buyers are looking for.
“Amenities to get the lifestyle and perceived value are critical,” Carlson said. “Builders have to distinguish themselves from the competition to show they are different and better from other communities.”
Deborah Blake, vice president of sales and marketing for the Southwest Area of Pulte Homes Corporation in Scottsdale, Ariz., said that the 50+ home buyer segment is “the best and the brightest opportunity” in today’s market because it potentially represents millions of qualified buyers with a solid financial profile.
“Many don’t need to sell a home to buy a new one,” said Blake, who is in charge of marketing and sales for Pulte's Del Webb brand of active adult communities in the region. “They can move forward without selling their existing home.”
Elevating Consumer Confidence
Running up through the November elections, “we’re going to see tough times for small to mid-sized builders, who will continue to sell homes at market price,” whatever that is, Blake predicted. But by next spring, there will be “a new outlook, a fresh outlook, consumers should be more confident, and we should take advantage of that.”
The impact of the housing stimulus package signed by the President at the end of July is already laying the foundation for that resurgence, she suggested.
“The first-time buyer tax credit does help in selling the existing home,” of prospective 50+ buyers, she said. “It just opened up their audience, and if they understand enough about it, they can help first-time buyers understand what opportunities there are.”
Changes in the reverse mortgage, which enables elderly home owners to tap the equity in their house, also will “help get boomers off the fence,” she said, and builders need to ensure that their sales teams are educated about provisions in the legislation that revive interest in the housing market.
“Most important, is the emotional impact that there is something new in the marketplace that wasn’t there before and an elevation in consumer confidence that things will be fine,” said Carlson of the stimulus bill.
An ‘Amazing’ Buyer’s Market
Covell noted that 50+ buyers typically haven’t bought a home for a long time, so they need to be educated about the process and asked what’s holding them back. “We need to ask them what issues are in the way," Covell said.
Prospective 50+ buyers “have anxiety about selling their current home because they don’t really understand their equity position,” said Blake, but most still have a sizable amount of equity despite the downturn because they have lived in their home for many years.
“Buying low is a great opportunity and selling low is not a bad opportunity either,” she said.
Buyers today can take advantage of “potentially the lowest prices that they will see for a very long time,” said Blake, with the replacement costs of the homes now in the marketplace sure to rise in the relatively near future.
“Solve other issues so they can take advantage of this opportunity,” she said. “This is an amazing buyer’s market. We’re not just talking about a home in the neighborhood, but quality of life that your customer can put a value on. You don’t want to miss another day of living here.”
Controlling the Existing Home Sales Process
To help move buyers for whom selling the existing home is a concern, Carlson uses a selling solutions program geared to using expert sales associates and Realtors® to help them get the maximum price for their project.
Carlson recommends putting together an inexpensive two-page flyer advising home buyers on what to do to make their current home as marketable as possible. “You want to make it sound more like a business proposition where they are trying to maximize the price of their house,” he said. Information can include how to improve landscaping, clean up the clutter in the garage and basement, get the maximum selling price and find the right mortgage and other financial options.
“Builders want to retain control of the process of selling the existing home, make sure the house is priced properly” and have the sales team work with specialists to ensure that everything is being done to sell the home, he said. If the home doesn’t sell within a 60- or 90-day period, the 50+ buyer can receive their deposit back from the builder.
“We can help you manage the sale better than you can,” Covell said, adding that he advises his buyers, and he agrees to an arrangement in which he will share the downside risks with them of having to sell the home for a low price.
Panelists also said that for many 50+ buyers selling an existing home shouldn’t be an obstacle that delays them from moving on to the next stage of their life with the purchase of a new home.
For those who don’t need the proceeds from an existing home sale to move, Covell said the focus should be on lifestyle, looking at assets and regarding the home that is being purchased as a second home that will become a permanent home down the road.
Blake said that the 50+ buyer should consider the dollar value of the improvements in their quality of life that will result from the purchase.
“What is their neighborhood like today? Have all their friends moved away? What about the security? Is there too much idle time?” she asked. A new home can bring new friends, opportunities for part-time jobs and a more secure environment.
By emphasizing the emotional side of the transaction, she said, the 50+ buyer can be brought to the conclusion that “I really want that, and I don’t like where I am today.”
Early word from the field is finding that some of the suggestions of the three 50+ housing experts participating in the seminar are paying off.
"I've been talking with two of my clients about asset recognition, and urging their prospects that don't need to sell their current home to move now while they can take advantage of the soft market. They finally agreed!" siad Larry Armstrong, CAASH, CAPS, MIRM, president and managing director of 50+ Communities of Colorado, LLC and a trustee of the NAHB 50+ Housing Council.
Armstrong added that the local home builders association was able to recruit four new members as a result of the quality of information presented at the seminar.
To purchase a recording of the audio seminar, click here.
For more information about the seminar or NAHB resources related to the 50+ market, e-mail Jeff Jenkins at NAHB, or call her at 800-368-5242 x8292.
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