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Active Adult Housing Sector is Stalled

Written by Carla Hill on Tuesday, 23 November 2010 6:00 pm

Even as members of the baby boomer generation make their way into retirement, the active adult housing sector is stalled.

Builder confidence in the 55+ housing market has been tepid. The National Association of Home Builders studies this effect in the 55+ Housing Market Index, which evaluates markets based on a scale "50" or greater as "good confidence" and less than "50" indicating "poor confidence." Results for the third quarter 2010 weren't stellar, with the index basing its findings on current sales, prospective buyer traffic and anticipated six-month sales.

According to the National Association of Home Builders' Chief Economist, David Crowe, "While we have anecdotal information that some local 55+ markets are beginning to rebound, the third-quarter data show that national conditions for this sector have not yet turned the corner. Real improvement won't happen until we have better employment numbers, and consumers who are more confident of keeping their jobs. Those consumers will buy the homes of the 55+ age cohort, so that the mature buyers will be able to move to more appropriate housing."

As seen in other segments of the economy, much of the success of business is reliant on the overall state of our job market. Currently, unemployment is nearly 10 percent, with more jobless claims being filed each week.

On the Housing Market's "50" scale, the index is now a 15, with all categories seeing drops in confidence since last quarter. Overall, however, builders gave the majority of their confidence to expected sales.

Other segments of the active adult market were low as well. "The 55+ multifamily condo HMI also showed continued weakness, with an index level of 10, down from the previous year's 13. All three index components - current sales, expected sales and buyer traffic - declined during this period," the NAHB reports.

According to the National Association of Home Builders, the bright spots of the market continue to be multifamily rentals. Though production is low and expected to remain so, demand is in the high 20's. This has been the trend for the last year.

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