New Home Sales Decreasing In 55 Plus Communities But Builder Confidence Remains Positive For The Future

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The ratio of new home sales to existing home sales in active adult communities has decreased steadily since 2014, according to new data from 55places.com. However, builder confidence in the 55-plus market remained positive in the first quarter of 2016.

As older, large developments have sold out, builders have replaced them with smaller communities, if at all. Plus, new communities are being developed at a much slower pace.

According to data collected by 55places.com, the ratio of new home sales to existing home sales in active adult communities has decreased steadily since 2014. However, builder confidence in the 55-plus market remained positive in the first quarter of 2016.

In a recent report published by the National Association of Home Builders (NAHB), the Housing Market Index (HMI) for 55-plus single-family homes was 56, indicating that more than half of the builders surveyed expressed conditions are good.

The overall HMI was lower than the previous period but still optimistic. Two of the three subcomponents decreased from the previous quarter: present sales and traffic of prospective buyers. On the other hand, expected sales for the next six months rose eight points to 71—the highest reading since the inception of the index in 2008.

“We see demand continuing to grow, as evidenced by our increasing sales, traffic and requests from buyers to work with our network of agents,” said Danny Goodman, chief operating officer for 55places.com.

55places.com is the most comprehensive online tool for active adult home shopping and buying. The website showcases real estate, facts, descriptions, and photos of 55-plus neighborhoods nationwide. In addition to listing homes for sale, 55places.com connects interested homebuyers with handpicked partner agents who are local real estate experts to complete the purchase.

In 2014, 40.2 percent of the homes sold through 55places.com and its partner agents were new construction. The percentage has decreased since then, down to 36.1 percent in 2015 and only 29.3 percent during the first four months of 2016. One major reason for the decline is that builders have been slow to replenish inventory in the current market.

“As older, large developments have sold out, builders have replaced them with smaller communities, if at all,” he said. “Plus, new communities are being developed at a much slower pace. As a result, in popular areas, consumers have less inventory to choose from and houses are selling quickly, often with multiple competing offers.”

This seller’s market 55places.com sees in active adult communities may contribute to the positive outlook for the future. According to Goodman, builders are once again realizing the strength of this market segment.

“Millennials may have surpassed Baby Boomers as the largest share of the population, but Boomers age 51 to 69 still have significant influence and buying power,” he said. “These older buyers tend to have built-up equity and are therefore more likely to be able to afford a more expensive home.”

He sees room in the market for both new and existing home sales.

“Both offer advantages,” he explained. “A brand-new property may have state-of-the-art amenities and the buyer can often customize while a resale might have unique charm and be in an established neighborhood.”

Everyone has different preferences when shopping for a new home, so it is important they investigate and consider both when trying to find the community that best fits their needs.
Goodman has gained a wealth of information on active adult living during his real estate career. In addition to his 12-year tenure at Del Webb, he continues to expand his knowledge by touring hundreds of 55-plus neighborhoods, planned developments and homes each year for 55places.com.

55places.com is a national online resource where people can find, research and compare 55-plus and active adult communities across the country. Goodman is available to answer questions or provide information regarding sales statistics and housing trends at the state, region and national level. Contact: (773) 278-5500.

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Debbie Szwast
@55Places
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