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Builder Confidence in Senior Housing Market Remains Strong in Q3

construction-twoHomebuilders in the single-family 55+ housing market showed strong confidence in the third quarter of 2015.

The National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) showed a reading of 60 in the third quarter, an increase of three points from last quarter.

According to the report, this is the sixth consecutive quarter with a reading above 50, which mean builders view condition as good than poor.

“Builders have a positive outlook on the 55+ housing market,” said Timothy McCarthy, chairman of NAHB's 55+ Housing Industry Council and managing partner of Traditions of America in Radnor, Pennsylvania. “In fact, the markets for single-family, apartments and condos are all doing quite well, and we expect that trend to continue.”

The NAHB reported increases among all three components of the 55+ single-family HMI from the previous quarter. Present sales rose three points to 65, expected sales for the next six months rose one point to 67, and prospective buyers traffic increased three points to 46.

“Like the overall housing market, we continue to see steady, positive growth in the 55+ market,” said David Crowe, NAHB chief economist. “With the economy and job growth continuing to improve gradually, many consumers are now able to sell their current homes at a suitable price, enabling them to buy or rent in a 55+ community.”

As the baby boomer generation edges closer to retirement age, housing demand for seniors is expected to increase, but could too much of a good thing mean oversupply?

Auction.com released a report highlighting that deal volume among those that are born between 1946 and 1964, has increased 60 percent year-over-year. However, there are concerns that this building spree to meet the rising demand for senior housing may lead to an oversupply, because it is unclear of what kind of housing this group will need or at what time they will need it.

"The numbers indicate that demand will grow over the long-term, although investors should always take into account the cyclical nature of the real estate market as well as regional factors," the report said.

Senior households have been rising slowly over the decades, but this is about to change in the coming years. Urban Institute’s analysis of housing trends determined that senior households are expected to grow dramatically by 2030 released in June 2015.

The Institute found in 1990, there were 20 million households for seniors ages 65 and up. In 2010, this number had reached 25.8 million, and by 2030, the institute projects that aging baby boomer households will reach 46 million.

“This dramatic growth will occur among both senior homeowners and renters, the authors said. “Our research suggests that from 2010 to 2030, senior homeowners will increase from 20 million to almost 34 million, and senior renters—who include both homeowners who will shift to renting and baby boomers who already rent—will increase from 5.8 million to 12.2 million.”

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.
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