AP Real Estate Writer
Home construction for Americans 55 and older is expected to drop by nearly half in 2009 compared with the previous year, a sign that the market for home building geared to senior citizens is contracting despite the wave of baby boomers approaching retirement.
The National Association of Home Builders reported Tuesday about 126,000 homes will be built this year for buyers aged 55 and older, down from about 249,000 last year. Construction for that age group is projected to increase by about 50,000 homes next year.
During the housing recession, homebuilders across the U.S. scaled back construction for several reasons, including a lack of available financing and a desire to reduce costs in the face of slack demand.
David Crowe, chief economist for the NAHB, said the rebound projected for 2010 hinges on the recovery of the overall market as buyers begin to take advantage of lower prices and lower interest rates.
“The seeds of recovery are out there,” Crowe said. “To put it one way, it is less bad as we proceed to each quarter.”
On Tuesday, a closely watched home price index showed home prices declined sharply in February but for the first time in 25 months the annual decline was not a record. Consumer confidence also rebounded strongly in April, the Conference Board said.
With about 75 million baby boomers already retired or approaching that age in coming years, the housing market for owners 55 and older is expected to be a more integral part of the overall housing supply in the U.S. In 2007, about one-fifth of all home buyers were 55 and older, up from 18 percent in 2005 and 16 percent in 2001, according to the NAHB’s analysis of the Census’ 2007 American Housing Survey.
Other stats give an interesting snapshot of the older home buyer.
For example, the average income for buyers moving into senior-only communities was $76,473, a drastic increase from $45,936 in 2005.
For those who moved into age-restricted rental housing, the average income was $19,860, reflecting a dramatic disparity between renters on limited incomes and owners with home equity and retirement savings.
Meanwhile, nearly 17 percent of 55 and older households that moved in 2007 chose their new home because of its proximity to work — up from 10 percent in 2003.
Also, nearly 17 percent of 55 and over households who moved into a single-family home work from their house, almost double what it was in 2003.
These numbers show that seniors are more concerned with working later in life to cope with economic issues, a trend that AARP notes has been active for a few years.
“The economy I think is impacting all of these changes,” said Elinor Ginzler, AARP’s senior vice president for livable communities. “More people are not retiring, they’re staying in the work force. Work is a factor in your life decision.”
Ginzler does stress that AARP surveys show that nearly nine in 10 seniors choose to stay in their current home rather than move, a choice known as “aging in place.”
The report was based on statistics from the Census’ 2007 American Housing Survey.