BUILDERS OF AGE-RESTRICTED HOUSING STRUGGLE AMID DECLINING MARKET CONDITIONS
New NAHB Index Finds Builder Confidence in 55+ Housing Market Low
LAS VEGAS, JAN. 20 – Builders of age-restricted housing expressed deep concern about the impact of the country’s deepening economic crisis on current homes sales in their market segment, according to the results of a new version of the Housing Market Index (HMI), released today for the first time by The National Association of Home Builders (NAHB).
Modeled on the NAHB/Wells Fargo Housing Market Index that NAHB has been conducting for more than 20 years to gauge builder perceptions of market conditions within the single-family home market, the new 55+ Housing Market Index tracks the confidence levels of builders serving the 55+ buyer. The new index was designed to provide insight into the home buying activities of the baby boomer generation, which is expected to exceed 85 million people by 2014.
"Over the past two decades, ‘active adult’ and service-enriched communities have become an important segment of the housing market, and this new index will help us gauge the health of that market," said Pat Kelley, chairman of NAHB’s 50+ Housing Council and a builder from St. Louis. Kelley noted that such data is especially important right now, when not only builders, but policymakers are making important decisions based on market conditions.
For the fourth quarter of 2008, the 55+ HMI debuted at 18, with all three of its components falling well below 50. Derived from a quarterly survey of builders and developers involved in 55+ housing, a rating of 50 generally indicates that the number of positive responses is about the same as the number of negative responses.
"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 components tracked in the index, gauge 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 for age-restricted condos and rentals.
"Our customers are usually in a good position to buy homes because they have spent years accumulating wealth–building up and the equity in their current homes and establishing good credit," explained Joanne (Jo) Theunissen, immediate past chair of the NAHB 50+ Housing Council and a builder from Michigan. "But in the current market, they can’t find buyers for their existing homes and many are delaying their retirements all together."
Builders were slightly more optimistic about this market segment for the next six months: the component gauging builder expectations stood at 24 in the fourth quarter of 2008. The component tracking traffic of prospective buyers stood at 11.
*EDITOR’S NOTE: Data on the market niche is available to the press. Please contact Ann Marie Moriarty at 202-266-8350 or [email protected]
ABOUT THE 50+ HOUSING COUNCIL: Since 1989, the 50+ Housing Council (formerly Seniors Housing Council) has served the special needs and interests of NAHB members and others in the housing industry who build for the growing 50+ market. The 50+ Housing Council provides information, education and research to its members and offers advocacy support to NAHB members on key 50+ housing issues. The council supports 19 local councils around the United States and serves more than 1,600 NAHB members involved in 50+ housing. Among the 50+ Housing Council products include the annual Building for Boomers & Beyond: 50+ Housing Symposium, industry research and education programs at the local, regional and national level. For more information, contact Ann Marie Moriarty at 202-266-8350, or [email protected]