55+ Market Down in Index But Preparing to Lead Recovery
Although the 55+ housing market holds the potential to lead a resurgence in home building from today’s devastating downturn, this sector of the industry has also fallen on hard times, according to the inaugural results of NAHB’s new 55+ Housing Market Index (HMI) , which were announced during last month’s International Builders’ Show in Las Vegas.
“What’s happening now, people have just stopped,” said Joanne (Jo) Theunissen, immediate past chair of the NAHB 50+ Housing Council and a builder from Michigan.
“Our customers are usually in a good position to buy homes because they have spent years accumulating wealth — building up the equity in their current homes and establishing good credit,” Theunissen said. “But in the current market, they can’t find buyers for their existing homes and many are delaying their retirements altogether.”
With the aging of the post-World War II baby boom, this segment of the housing industry has increasingly gained the attention of builders in recent years, she said, and the 55+ population is expected to swell by more than 85 million people by 2014.
Modeled after the NAHB/Wells Fargo Housing Market Index that NAHB has been conducting for more than 20 years to gauge builder perceptions of market conditions in the single-family housing market, the new 55+ HMI tracks the confidence levels of builders serving the 55+ buyer. For the fourth quarter of 2008, the 55+ HMI debuted with a reading of 18.
All three components of the index for the final three months of last year fell well below the level of 50, which generally indicates that the number of positive and negative responses are the same.
“In December, NAHB’s HMI for the overall single-family home market was at an all-time low of 9, so the 55+ market is holding up slightly better than the market in general, but that is little consolation,” said NAHB Chief Economist David Crowe. “Consumers across the country are suffering, and every sector of the housing industry is being impacted by the current economic and financial crisis.”
The three primary components of the index track builder sentiment on present sales conditions, expectations for the next six months and the traffic of prospective single-family home buyers in the 55+ market. Those components stood at 17, 24 and 9, respectively, for the fourth quarter of 2008. Separate components of the index track builder sentiment on age-restricted condos and rentals.
Although both builders and buyers are currently having trouble selling homes and getting credit, 55+ buyers — who hold more than 50% of the nation’s home owner equity — are in a better position than the general population to take advantage of the low interest rates, affordable prices and wide selection of homes now available, said Pat Kelley, chairman of NAHB’s 50+ Housing Council and a builder from St. Louis. “This is a perfect time to buy,” he said, and those who do “will certainly improve their investment.”
In the meantime, builders serving the 55+ market are working to identify strategies that will succeed in appealing to these buyers, said Theunissen.
“Builders are being careful about the choice of the product they offer,” she said. “It has to be better than what 55+ buyers currently have, as well as smaller, more comfortable, in a better neighborhood, green and energy-efficient.”
For information on 50+ resources available from NAHB, e-mail Ann Marie Moriarty or call her at 800-368-5242 x8350.
Find Out What the 45+ Housing Market Wants
“Right House, Right Place, Right Time: Community and Lifestyle Preferences of the 45+ Housing Market,” available through BuilderBooks.com, will help determine the right design, home features and amenities to attract boomer home buyers in your market.
Author, Margaret A. Wylde guides readers through the latest survey results on this important consumer group and explains what their responses mean for today’s and tomorrow’s home building industry.
To view or purchase this publication online, click here, or call 800-223-2665.