People age 55 and over, who as a group have taken the hardest hit to their net worth in the slumping economy, are waiting out the recession. When they return as homebuyers, they will not be looking for the same kind of house they would have been a year ago, say housing experts.
The value of baby boomers’ homes currently is equivalent to 2003 prices. That has softened the formerly solid baby-boomer and senior market and has homebuilders scrambling to figure out what boomers and seniors will want and how to deliver it. That market’s numbers are significant: More than 100,000 U.S. households are headed by a person 55 years old or older, accounting for 11% of all households, says the U.S. Census Bureau. Currently, 30% of buyers of custom homes are 55-plus.
Demographic and other statistics indicate the second quarter of 2009 will end up being “less bad” than the first, and there will be a positive uptick in the last half of the year, said David Crowe, chief economist of the National Association of Home Builders, at NAHB’s “Building for Boomers & Beyond 50+ Housing Symposium,” held April 27-29 in Philadelphia. “We are very near or at the bottom of single-family home sales” now, he told attendees. He sees multifamily housing recovering by the end of this year or next year. Crowe said the main question is, How steep will the uptick be, L-, V- or U-shaped?
As their retirement savings and house values have plummeted, the formerly secure boomers and seniors have hunkered down. The biggest competition for homebuilders is their current home, said Westport, Conn.-based John N. Migliaccio, director of research for MetLife’s Mature Market Institute.
Crowe and Migliaccio presented results of a new study by the institute on reasons for people 55 years old and older to move. Many boomers now intend to work longer than they originally planned and want to be close to work centers when they move—not necessarily cities but city centers that provide similar services, amenities and employment opportunities, said Chantilly, Va.-based Mark Stemen, senior vice president of Landover Group, part of K. Hovnanian’s Four Seasons active-adult communities. That may leave builders of unfinished communities in bucolic outlying areas holding the bag. Many have gone bankrupt or been bought by competitors.
Data show people 55-plus now are less interested in a larger single-family home; are more willing to pay for energy-saving, environmentally friendly enhancements; and want to be close to relatives, said Migliaccio.