Don't count out the housing market for people over age 55. Many have lost jobs and seen their retirement portfolios crash in the past half decade, but the market for communities dedicated to active adult living is actually under-served, according to economists Adam Ducker and Paul Emrath, who told a rapt audience of builders at the International Builders Show in Orlando, Fla., on Wednesday that as the housing market has begun an agonizingly slow recovery, the 55+ market is (slightly) ahead of the curve.
     Citing the 55+ Housing Market Index (HMI) Survey, Ducker and Emrath pointed out that builders are seeing an uptick in sales of single-family homes, condos and rental apartments to older Americans, and they say the trend is likely to continue upward, even if not at a pace that the construction industry might prefer.
     What's keeping the market down, Ducker said, is financing and buyers themselves. Although the 55+ market may be slightly different than the overall housing market, he said, "financing has been a drag on the market in two different ways: the availability of credit ... (and) buyers, the mortgage markets."
     In past credit crunches, long-term interest rates might deter buyers, but "right now that's not the problem," he said. Nevertheless, "if banks aren't making a loan at 4%, that's not much better than not making a loan at 6%." And banks were keeping money tight last quarter, according to senior loan officers surveyed by the Federal Reserve. The Fed says banks are easing money for construction, but the National Association of Home Builders has not found that to be true, and is still seeing a tightening of money loaned as well as some banks not loaning at all, Ducker said.
     Slightly more than half of builders are putting construction projects on hold, he said, "waiting for better financing conditions."
     Still, the outlook is better than it has been. "The trend is moving in the right direction, a little bit," Ducker told the audience.
     The second "drag on the market" is buyers themselves, Ducker said, citing the reasons the 55+ demographic is reticent to buy: They can't sell their current house at a good price (historically, most homes are financed at least in part from proceeds of a previous house); they are influenced by negative media reports on the economy; they think new home prices will fall farther; they believe the nation's employment and economic situation is worsening, and they think they can't get financing.
     Nevertheless, according to the HMI forecast, single-family housing starts in the 55+ range appear to have bottomed out in 2011, while multi-family starts turned up sharply last year after hitting bottom in 2010, and both are forecast to be even stronger this year and next.
     And that was music to the ears of the builders.