Aging Boomers May Be Hard to Budge From Current Homes

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The 55+ market is becoming an increasingly important focus of the nation’s housing industry as members of the baby boom approach the traditional retirement years, but builders hoping to entice households into new homes may find the going tough because older Americans, by and large, are happy with where they currently live.

A comprehensive profile of the growing housing market for the elderly compiled earlier this year by NAHB’s 50+ Housing Council describes a group of households that generally include only one or two persons, many of whom have relatively high incomes and many of whom are at the low end of the pay scale. The study then looks at the characteristics of the homes in which members of this population live, as well as factors behind their moving decisions, to suggest opportunities for tapping into this market.

By 2012, 40% of all U.S. households will be 55 or older, according to NAHB, which projects that the nation’s 55+ population, which turned 55 as of July 1, 2005 or later, will grow at well over 2% annually for the next decade, reaching 85 million by 2014.

Applying the 55+ market share derived from the 2005 American Housing Survey (AHS) to NAHB’s 2007 housing forecast, the number of housing units sold to or occupied by these households will account for more than 370,000 of this year’s expected 1.6 million housing starts, with 263,000 of them single-family. The estimates also show that 55+ customers this year will account for more than 190,000 of a projected 970,000 new single-family sales and more than 900,000 of a projected 5.25 million existing single-family home sales.

About 145,000 of the housing starts in 2005 were in age-qualified communities or those that are not age-qualified but have managed to attract buyers who are mostly in their mid-50s or older.

Revving up the 55+ market to its full potential is complicated by the fact that most of these households feel satisfied with the communities in which they live. When households in the 55 to 64 age bracket were asked by the AHS to rate their communities on a scale of one to 10, with 10 representing the best, 48% gave them a nine or 10, and that favorable response climbed with age, reaching 57% for households age 75 and older. More than three-quarters of the 55 to 64 group responded with a rating of eight or higher.

“This is consistent with the low incidence of community dis-amenities reported by older households and suggests that developers of age-qualified housing intended for older residents have a substantial hurdle to overcome in attracting these residents away from their current neighborhoods,” according to the report.

Fully 70% of the 26 million 55+ households in the U.S. in 2005 lived in ordinary communities that were not age-qualified or mostly occupied by people their age. More than three-fourths of households age 55 or older moved into their current residence before 2000 – 36.9% before 1980, 15.5% between 1980 and 1989 and 24.6% from 1990 to 1999. In contrast, 30.4% of households under age 45 had moved within the previous year.

Asked on the AHS to rate their current home on the same scale, 55+ households on average gave their home a score of 8.6, further suggesting that developers have their work cut out for them.

However, the NAHB report does suggest many possibilities for devising strategies to attract the attention of 55+ households and turn them into prospective buyers. Among the findings:

In a 2003 study by NAHB and AARP on the housing preferences of seniors age 50+, safe neighborhoods were identified as the most important characteristic for their community. Ninety-six percent cited its importance, and 92% said they lived in a safe community. However, on a list of 14 items, there were four characteristics in which there was a significant gap between the percentage of those identifying it as important and the percentage reporting that it existed in their community: a hospital (a difference of 22%), a drug store within one-half mile (21%), their doctors’ offices (20%); and a grocery store within one-half mile (19%).
According to the 2005 Current Population Survey, about 4.94% of people age 55+ moved within the U.S. in the past year. More than 50% of those who moved stayed in the same county and 21% stayed in the same state. And the 55+ share of total households does not vary drastically across most states, remaining within a relatively narrow band of between 30% and 40%. The 55+ share by state ranges from a high of 42.3% in West Virginia to a low of 26.8% in Alaska.
Compared to the overall distribution of households, the AHS indicates that more age-qualified active adult communities are in the South Census region (48.5%) and fewer are in the Midwest (7.5%).
There are substantial differences in amenities based on the type of community. For example, about 70% of age-qualified active adult or independent living communities provide recreational facilities compared to only 35% of other 55+ owner-occupied communities. Thirty-eight percent of active adult communities are gated, compared to only 3.4% of single-family detached.
When the AHS asked 55+ households in single-family homes why they had moved recently, the most common response was for family/personal reasons, including the desire to live close to another family member or relatives. This response generally increased with age. Also at the top of the list, households in the 55 to 64 age group moved because they wanted a better quality house (15%) or a larger place (10.4%). The study also found some relationship between moving and overall economic conditions. For example, in the recessionary year of 2001 fewer than usual 55+ households moved because they wanted larger housing units and more moved because they wanted a less expensive place to live. When the economy improved in 2003, this trend was reversed.
According to the 2005 AHS, nearly 20% of recent movers who moved into age-qualified housing said they moved because they wanted a higher-quality housing unit; that reason was cited less often by those who moved into other 55+ owner-occupied communities (10.1%) and independent living communities (12.2%). The AHS also showed that less expensive housing is more often important to independent living residents, while quality is more important to those moving into age-qualified active adult homes. This is the opposite of what builders said when they were surveyed by NAHB in 2003 and asked what they thought their customers wanted. Only 1.5% of the households moving into age-qualified active adult homes reported moving because they wanted larger housing units, compared to about 9% for 55+ households moving into single-family detached homes in general.
A substantial share of 55+ households chose a community because they liked the design; this was the reason for choosing a community most often cited by households moving into single-family detached homes (33.2% of those in the 55 to 64 category). For the 55 to 64 age bracket, the housing unit itself was the second most common reason for choosing a community (29.7%).
In the single-family detached market, 35.9% of households in the 55 to 64 age group reported difficulty in at least one physical activity: difficulty in dressing (9%); vision or hearing difficulty (11%); difficulty in going out (11.9%); difficulty in walking, reaching, lifting, carrying, climbing stairs or getting around the house (27.1%); difficulty in remembering (12.7%); and difficulty in working (23.8%). More than 45% of those 65 to 74 and 70% of households 75 or older reported difficulty in some activity.
The average income of households in the markets for both single-family detached and multifamily housing decreased with age. The 55+ customers in the single-family detached housing market earned on average $27,000 more than the 55+ customers in the multifamily housing market.
In 2005, 11.5% of 55+ households living in single-family detached homes and 6.7% of those in multifamily reported working at home, an increase over the prior AHS survey results from 2003.
In the single-family detached housing market, 55+ customers on average looked at 10 homes before deciding upon a unit, about the same as younger households. However, single-family customers in the oldest age bracket (75+) only look at about four homes before making their final choice. Customers who chose multifamily housing looked at considerably fewer units (about five) before moving in, possibly because those who rent spend less effort on finding a unit than buyers.
Customers who chose age-qualified active adult or other 55+ owner-occupied communities were more likely to shop for homes in multiple neighborhoods (48.9% and 51%, respectively). A smaller share (32%) of 55+ customers for independent living or other multifamily housing looked at more than one neighborhood before moving.

For more information, e-mail Elizabeth Landry at NAHB, or call her at 800-368-5242 x8680.

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