The increasing strength of the 55+ housing segment is set to continue over the next decade as the baby boomer generation ages and seeks to downsize or relocate, according to a new report by the National Association of Home Builders based on data from the American Community Survey.
In their new homes, this buyer segment is eyeing single-level floor plans within an overall smaller footprint, but still desires space to accommodate family and guests, the report found. Additionally, energy efficiency and the ability to walk to nearby social activities and amenities is also important.
- This group reported high rates of in-migration, meaning they are downsizing and relocating within their existing communities. Compared to younger households, new buyers in the 55+ segment owned their homes outright sooner.
Growth in demand within the 55+, or active adult, category has homebuilders increasingly optimistic about the potential for development. The NAHB's 55+ Housing Market Index ticked up two points to a reading of 59 during the third quarter of 2016 from the previous quarter, marking the 10th-consecutive quarter above the break-even point of 50.
Pent up demand in the sector comes as the U.S. population over 80 is set to double in the next two decades, with the head of one in three U.S. households being over age 65 by 2035, according to a recent report from the Harvard Joint Center for Housing Studies.The report builds on further evidence from CBRE, which noted early last year that senior housing occupancy in 2015 was at its highest level since 2007.
Increasingly, homebuilders are adapting developments to incorporate homes that aim to attract potential buyers from this category, including lower-maintenance homes with smaller-footprints. Last summer, homebuilder D.R. Horton rolled out its Freedom Homes brand of age-restricted communities in Houston with plans to expand to 30% of its markets by the end of next year.
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