Compared to the same period in 2011, the fourth quarter of 2012, revealed that the builder confidence in the 55 plus single-family housing market showed continued improvement. The Housing Market Index (HMI) revealed a 10 point increase to a level 28, which is the fifth consecutive quarter of year over year improvements.
Bob Karen, chairman of HAHB’s 50 plus Housing Council, said, “We continue to see increased optimism from builders and developers in the 55 plus housing segment. “Those customers who had been on the sidelines waiting for more stability in their local markets are starting to make their move toward either purchasing a home or renting an apartment that is designed to more specifically suit their lifestyle.”
Single-family homes and multi-family condominiums are two segments of the 55 plus HMI. Each of these HMIs is determined by measuring builder sentiment based on a survey that asks if current sales are good, fair, or poor, based on prospective buyer traffic and anticipated six-month sales for that market. More builders view conditions as poor instead of good, if the index is below 50.
The HMI for 55 plus single-family homes remained below 50. However, they improved significantly from a year ago. Traffic of prospective buyers increased nine points to 24. Expected sales for the next six months increased 12 points to 38. Present sales increased 10 points to 27.
The weakest segment of the 55 plus housing market is still the condo HMI. However, it did post an increase of six points to 19. All components of the 55 plus multifamily HMI increased compared to last year. Expected sales for the next six months increased eight points to 25. Present sales increased five points to 17. Traffic of prospective buyers increased six points to 21.
The 55 plus multifamily rental indices remained stable in the fourth quarter as compared to last year, when it had already recovered substantially. There was some uncertainty about low-income housing tax credit, which is the financial driving force behind apartments built for this segment of the market. Present production decreased three points to 31. Expected future production decreased one point to 34 and current demand decreased four points to 38. Expected future demand decreased five points to 39.
NAHB Chief Economist David Crowe said, “Like the overall housing market, the 55 plus segment of the market is undergoing a slow but steady recovery. “That said, there are serious obstacles to a continued and stronger recovery. While problems with tight credit conditions for buyers and obtaining accurate appraisals are still lingering, new problems like spot shortages and rising costs for labor, materials and lots are beginning to emerge.”