With Baby Boomers approaching retirement age in record numbers, and home values returning to a point where their owners are finally comfortable enough to sell, it’s easy to understand why builders are optimistic about the 55+ housing market these days.
The National Association of Home Builders’ (NAHB) 55+ Housing Market Index increased 14 points to 50 in the third quarter – the highest it’s been since the index debuted five years ago. Third-quarter results marked the eighth consecutive quarter of year-over-year improvements. The index, which measures builder sentiments about the market, is based on a survey of current sales, prospective buyer traffic and expected sales for the next six months. All three areas showed improvement. The biggest leap was in current sales, which climbed 16 points.
“We have seen steady improvement in the 55+ housing sector as buyers and renters are attracted to new homes and communities that offer the lifestyle they desire,” Robert Karen, chairman of NAHB’s 50+ Housing Council and managing member of the Symphony Development Group, said in a statement. “Although the market is significantly stronger than it has been in recent years, we still have a ways to go to get back to full production.”
Homebuilders and developers have good reason to pay close attention to this market segment, which includes single-family homes, condominiums and apartments. According to the U.S. Census Bureau, 10,000 people turn 60 every day. This generation of active adult buyers are living longer and have more disposable income than their predecessors.
MetLife’s Housing for the 55+ Market: Trends and Insights on Boomers and Beyond study sheds light on home-purchase preferences of this powerful group. Among the report’s key findings:
• Many homeowners age 55+ are choosing to “age in place,” but a growing number – more than 1.2 million households – are opting to move to communities designed to meet their needs.
• The chief reasons for moving to a 55+ community were family or personal reasons, financial or employment reasons and the desire for a higher-quality home.
• Active adult communities are attracting more buyers who are age 60 and under.
NAHB Chief Economist David Crowe said as the housing market improves in general, so does the 55+ sector. “Consumers are more likely to be able to sell their current homes, which allows them to buy a new home or move into an apartment that suits their needs,” he said.
(Editor’s Note: Andy Warren is President of Maracay Homes, the Arizona subsidiary of the Weyerhaeuser Real Estate Company. He serves on the Board of Directors for the Home Builders Association of Central Arizona and Greater Phoenix Leadership; as well as the Board of Directors and as an Executive Committee member with the Greater Phoenix Economic Council. He is also an active member of the Urban Land Institute.)