50+ Housing Slump Comes to the End of the Road

This year ahead looks increasingly positive for the active adult housing market, according to participants at an Oct. 7 Web seminar sponsored by the NAHB’s 50+ Housing Council.  Although, unemployment and tighter credit conditions still linger as constraints on sales and construction activity, they said, in the early stages of recovery prospective buyers will continue to be price-conscious and to demonstrate restraint.

 Margaret Wylde, president and CEO of ProMatura Group, LLC, led an hour-long discussion on prospects for the 50+ market.  She stated “ It’s not time to run out and start great developments at this moment, there’s going to be a gradual pull out from where we are now, and within the next two years we will see a significant rebound.”

 Wylde said that the industry turnaround will occur in a climate of initially slow growth, with job concerns exerting significant constraints on consumer demand, which is the driving force in the nations economy.

 “There is high unemployment today,” she said, “and it is projected to get a bit higher.  New job growth or creation is slow and will continue to be slow for a while.  Jobs just aren’t being filled.  New jobs aren’t being created and some jobs are still being destroyed.”

 Credit availability still remains an obstacle, she said.  Her company’s polling of active adult home builders in September found that credit woes had worsened over the previous six months.

 Seventy-four percent of the builders said that it had become harder to secure credit for business operations; 70% reported tightening in the availability of credit for residential acquisitions and development; and 61% observed that it had grown tougher for their customers to qualify for a mortgage.

 On the brighter side, in a survey in September of 50+ households with annual incomes of $50,000 or more who either purchased a home in the last two years or considered buying one in the coming three years, 68% rated today’s market as “excellent to good” for purchasing a home.

 Despite major obstacles on the job and credit fronts, 74% of the active adult builders contacted last month said they expected to see rising home sales in the coming six months.  “We’ve come to the end of the road in terms of declining sales,” said Bernie Smith, CAASH, ProMatura Group’s chief operating officer.

 Even with business down, Wylde noted that active adult communities have avoided the soaring foreclosure rates occurring elsewhere; 78% of those surveyed in September reported no foreclosures and 9% had one.

 Gauging the potential for active adult housing, she also said that 29% of the prospective buyers identified in the last month’s survey said they would consider buying in a 55+ community, considerably higher than the 8% in the survey who said they lived in age qualified housing, of which about 70% were in active adult housing.

 Active adult buyers, she added, are more amendable to giving up extra space and moving to a smaller home because they are trading size for quality.