The Graying of American Housing Continues

Report shows rise in older households and projects more construction growth for 55-plus market.

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Senior housing decisions remain in a "back to basics" mode, according to a new report from the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute (MMI). Based on U.S. Census Bureau data, the report found that proximity to family has become a stronger reason for seniors to relocate in recent years. And because of the slow pace of home sales, seniors have become much more likely to fund new-home down payments from cash and savings than with proceeds from the sale of their prior homes.

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"Only 55 percent of the new age-qualified active adult home buyers who made a down payment reported that it came from the sale of a previous home, significantly down from 92 percent in 2007," the report said. "Other 55+ home buyers registered similar difficulties selling their previous residences in 2009."

The Census numbers also continue to show a gradual but sustained move toward more concentrations of older people in 55-plus neighborhoods and age-restricted communities. While 68.9 percent of all older people lived in age-diverse settings in 2009, that's down from more than 71 percent in 2001. Reflecting the high growth rates of older populations, last year there were 39.5 million households with a primary homeowner who was at least 55 years of age, nearly six million more than in 2001. Over the same period, the total of non-55+ households was unchanged at about 65.5 million. By 2020, the report said, 45 percent of American households will be headed by someone who's at least 55 years old.

The recession's impact on senior housing was also reflected in work-related measures. More than 10 percent of moves last year by people aged 55 to 64 were driven by job changes, up sharply from prerecession periods. Likewise, proximity to work determined more than 12 percent of moves into age-restricted active adult communities.

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The continued rise in telecommuting and the need for seniors to continue working also showed up in the percentage of older purchasers of single-family homes who said they worked from home. More than 15 percent of senior home buyers last year said they worked at home, compared with 8.4 percent in 2003. The trend "has issues from an economic view and also from a design view," said John N. Migliaccio, MMI's director of research. While senior-friendly design features took at least a temporary backseat to financial concerns among last year's older home buyers, builders of new homes will need to increase their attention when it comes to creating spaces that can be used for at-home offices.

With housing activity remaining slow compared with past trends, the continuation of a buyer's market for new homes means that seniors are often finding better homes for less money. In more affluent retirement communities, prices have held up well, according to the report. Part of the reason, suggested David Crowe, chief economist with the NAHB, is that it has been primarily the more affluent buyers who have been able to move since the housing downturn began in 2007.

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As the economy recovers, Crowe said the NAHB forecasts that growth in new construction of single-family homes for consumers in 55-plus communities will outpace the industry, rising by a projected 30 percent this year and another 46 percent in 2012. Still, these numbers are measured from a depressed base, and will mean fewer than 135,000 new homes for the 55-plus market over a two-year span.

Migliaccio said there continues to be a slow but steady rise in the use of reverse mortgages, which are generally available to homeowners who are at least 62 years old and have substantial equity in their homes. He said reverse mortgages tend to be taken out by older, lower-income women who have spent a long time in their homes.

Twitter: @PhilMoeller