The publication Senior Housing News, recently ran a story on the high rate of builder confidence in regard to the 55+ real estate market. Contributor Jason Olivia relayed the latest from the (NAHB) National Association of Home Builders’ 55+ Housing Market Index. The organization’s findings show that home builders have the highest level of confidence for this specific group of home buyers. In fact, the present level of confidence among home builders for the 55 and over set has not been recorded since 2008!
In the y-o-y analysis, taken from the third quarters of 2013 and 2014, home builder confidence towards Baby Boomer business rose by 9 points for a score of 59. Please note that an index reading below 50 indicates that more builders see market conditions as poor rather than good. The NAHB also has a designated 55+ Housing Council. Its chairman Steve Bomberger, responded to the information with this observation, “Demand for 55+ housing has never been higher, and this quarter’s index clearly demonstrates that. Consumers in this market are looking for a home that caters toward their specific needs, and 55+ builders and developers are able to create homes and communities that address these needs.”
As the nation’s population of Baby Boomers reaches retirement age, they are most definitely impacting the housing market. U.S. Census data tells us that over 16 million Boomers already own their homes outright. This fact puts them in a great position to buy new homes that cater to their needs and desires. Whether their goal involves downsizing, moving closer to family members or living in an active, convenient, master-planned community, most Baby Boomers are in positive financial situations and able to call the shots.
Another plus for home builders is that the youngest group of Boomers, those born in 1964, all turned 50 last year. In addition to setting their sights on new homes and more active lifestyles, another buying trend among this crowd is the goal to own multiple properties for vacation, retirement and investment purposes. They often remain in their current homes mortgage free and rent the second home with plans of moving upon retirement.
The NAHB’s 55+ HMI is divided into two segments: single-family homes and multifamily condominiums. The indices measure builder confidence based on current sales, projections for buyer traffic and expected six-month sales. Respondents score their answers good, fair or poor. The current poll revealed the following: In the single-family 55+ HMI, all components rose from one year ago. Present sales increased by 13 points to 65. Predicted sales for the next six months went up by 10 points to 63. Feelings regarding the future traffic of prospective buyers rose three points to 46. The multifamily index showed surges across all of its components as well, although slightly lower than its single-family counterpart.
Baby Boomers are also looking to the benefits of maintenance-free condo living. The 55+ HMI for multifamily condos reflected a four-point rise for a total of 41. This marks its best Q3 reading since the index was created. Current sales climbed up five points to 42 while future sales over the next six months grew three points to 43. Both of the indices that monitor production and demand of 55+ multifamily rentals displayed positive results in the third quarter. Production was up by four for a total of 52 and future demand also came in at 52, which reflects a two-point increase.
Even better were the categories that measure confidence for current demand and feelings for the direction of just where future demand is headed. Confidence levels for the current demand for existing units rose four points to 64 and sentiment for future demand went up five points to 65.
The NAHB’s chief economist, David Crow reflected, “The consistent rise in home equity has contributed to strong gains in the 55+ housing market. Many consumers who had been sidelined due to the inability to sell their current homes at an acceptable price are now in a position where they can sell their homes, enabling them to rent or buy in a 55+ community.”
This is certainly great news for the nation’s home building industry as we head into a new year!
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