Builders More Upbeat About Senior Rental Market

Washington, DC, May 13, 2011 -- Builder confidence in the 55+ housing market was markedly more upbeat in the first quarter of 2011 for apartment production and demand than for sales of single-family or condominium homes, according to a new survey released by the National Association of Home Builders.

The NAHB’s expected demand index for 55+ multifamily rental units rose 10 points, to 44, from a year earlier, while the 55+ Housing Market Indices for single-family units and condos declined 2 and 3 points, down to 17 and 8, respectively.

“Builders in the 55+ market are still finding that some customers are hesitant to buy,” said Ken Simons, chair of the NAHB 50+ Housing Council Board of Trustees.

“Many prospective 55+ buyers are having trouble selling their existing homes, a problem often made worse by low appraisals.”  

The index measures builder sentiment based on current sales, prospective buyer traffic and anticipated six-month sales for that market.

A number greater than 50 indicates that more builders view conditions as good than poor.

Among the index components, present sales dropped two points, to 15. Expected sales (six months from now) dropped six points, to 24. And traffic of prospective buyers fell one point, to 17.

The 55+ multifamily condo HMI also showed weakness, with an index level of 8, down from 11 at the beginning of 2010. All three index components – current sales, expected sales and buyer traffic – declined during this period.

In contrast, indices of current and expected production of 55+ apartments gained 7 and 8 points, up to 20 and 27, respectively, in the first quarter of 2011.  The index measuring current demand jumped 11 points, up to 39.

“The increased sense of optimism in the 55+ multifamily rental market is a welcome sign and consistent with other indicators of relative strength in rental housing markets,” said NAHB’s Chief Economist, David Crowe.

“Builder responses also indicate that demand for existing 55+ rental apartments is running ahead of production.  A shortage may even emerge in that segment of the market, if pent-up demand emerges quickly but builders’ inability to access credit continues,” he said.