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Builder confidence in the 55+ housing market was markedly more upbeat in the first quarter of 2011 for apartment production and demand than for sales of single-family or condominium homes, according to builders who were surveyed for NAHB’s 55+ Housing Market Index (55+ HMI).
The component of the index gauging expected demand for 55+ multifamily rental units rose 10 points, to 44, from a year earlier, while prospects for single-family units and condos declined two and three points, down to 17 and 8, respectively.
“Builders in the 55+ market are still finding that some customers are hesitant to buy,” said Ken Simons, a New Jersey developer and chair of the NAHB 50+ Housing Council Board of Trustees. “Many prospective 55+ buyers are having trouble selling their existing homes, a problem often made worse by low appraisals.”
The 55+ HMI measures builder sentiment on current sales, prospective buyer traffic and sales anticipated in six months. On a scale of 0 to 100, a number greater than 50 indicates that more builders view conditions as good than poor.
Among the components of the index measuring the 55+ market for single-family homes, present sales dropped two points, to 15. Sales expected in six months dropped six points, to 24. And the traffic of prospective buyers fell one point, to 17.
Weakness was also displayed in multifamily condo activity, which registered an 8 on the index, down from 11 in the first quarter of 2010.
All three index components for multifamily condominiums — current sales, expected sales and buyer traffic — declined during the first three months of this year.
In contrast, current and expected production of 55+ apartments gained seven and eight points, rising to 20 and 27, respectively, in the first quarter of 2011; and current demand for apartments jumped 11 points, to 39.
“The increased sense of optimism in the 55+ multifamily rental market is a welcome sign and consistent with other indicators of relative strength in rental housing markets,” said NAHB Chief Economist David Crowe.
“Builder responses also indicate that demand for existing 55+ rental apartments is running ahead of production,” he said. “A shortage may even emerge in that segment of the market, if pent-up demand emerges quickly but builders inability to access credit continues.”
The 55+ Housing Market Index is issued quarterly by the NAHB Economics and Housing Policy Group.
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