Housing Market Index Emphasizes Builder Confidence in 55 and Over Homebuyers
The November 2012 report released by the National Association of Home Builders, frequently referred to as NAHB, indicates growing builder confidence in the 55 and over housing market. The third quarter 2012 showed the increase in the 55+ Housing Market Index (HMI) for single-family homes has risen from 12 to 36 in just one year. This is a record high for the third quarter of HMI, started in 2008. It is a welcome surprise to developers and builders. The general feeling is that people in that age group are making a life-change decision on whether an apartment or home best suits their lifestyle. Either choice is good for the market.
The HMI consists of three segments for the 55+ market. A survey focuses on builders and how they view prospective buyer traffic, current sales and anticipated 6-month sales. Choices are poor, fair or good, with a higher number indicating positive results. If the index is below 50, conditions are poor. The paradox in the recent index is that each component reflects less than 50, but has stirred excitement. What did the builders say about the 55+ market?
Rental apartments for this age group had an impressive recovery in 2011 and increases in the 3rd quarter 2012. There were increases in all areas:
- Present production up 6 points to 31.
- Anticipated future production up 9 points to 35.
- Current demand for existing units up 2 points to 42.
- Anticipated future demand for existing units up 2 points to 44.
Single-family homes represent a healthy improvement:
- Present sales up 25 points to 36.
- Expected sales (next 6 months) up 27 points to 42.
- Traffic of prospective buyers up 20 points to 33.
Multifamily condominiums are still the weakest part of the 55+ housing market, although the overall increase to 23 points (up from 13) is the highest 3rd quarter reading since 2008. Results of each area are:
- Present sales up 13 points to 22.
- Anticipated sales up 19 points to 29.
- Traffic of prospective buyers up 11 points to 22.
Will the upward trend continue? The indicators are positive, with conditions improving across the nation. Deterrents include difficulty in selling current homes due to tight mortgage credit and a shortage of buildable lots in market areas drawing the attention of the fifty-five and over market.