When times are tough and the weather turns stormy, it’s natural that some people will seek out shelter and wait out the risks at play. Yet times like these often present the greatest opportunities if you’re ready to take advantage. In our industry of home building and land development, many of our best franchisees joined us during the global financial crisis. Although they faced obvious challenges, they’ve stuck with us over the years and grown their businesses along the way.
They were able to “catch the wave” at the right time — just as the real estate market was beginning to rebound. Now, a similar opportunity has presented itself. Despite current economic tensions, a number of factors are creating an environment ripe with potential.
Stabilizing Interest Rates
Some might be skeptical about the market’s health given current economic conditions, but there are several signs that interest rates are stabilizing and creating opportunities for growth in new construction. Experts have predicted that inflation rates will start to reach the Federal Reserve’s 2% target range by early 2024, which would remove some of the upward pressure off of mortgage rates and encourage more people to borrow money for larger purchases.
Growth in New Properties
Not only are economic trends heading in the right direction, but there’s plenty of reason to be excited about the housing market, particularly when it comes to newly built properties. According to recent data, 30.6% of U.S. single-family homes for sale in Q3 2023 were new construction, the highest share of any third quarter on record.
Home builders that build new homes are increasingly competitive compared to the used home market, and though some experts have suggested that high mortgage rates could slow down new home construction, the move towards market stability can easily smooth this out.
The 55+ Opportunity
With the housing market trending up, there is a lot of demand for new homes that are popular within a niche that few builders are capitalizing on: the 55+ space. Baby boomers are the largest segment of new home buyers right now, with the combined share of younger boomers (58 to 67 years old) and older boomers (68 to 76 years old) having risen to 39% back in 2022. These numbers are likely to pick up over time as the population ages, especially as older Americans are increasingly looking for a home they can comfortably spend the rest of their lives in.
According to data from Claritas, the 75+ population is forecasted to increase 9.6% between now and 2028, while the 85+ population is expected to grow 7.7% during that time. Furthermore, JCHS projects that U.S. households headed by someone more than 80 years old will reach 17.5 million in 2038, accounting for 12% of all households.
All of this means that the 55+ space is a largely untapped market with plenty to offer to those who are willing to invest. Epcon has recognized the value of building homes and communities popular with this demographic before the term became popularized, having advocated for it since 1986.
Despite the growing demand among older Americans, few builders are capitalizing on building new homes for this demographic, meaning that we are often the only significant player in town in many of our markets. Even when there are other builders looking to appeal to this audience, the unique boutique-sized “B&B” nature of our communities appeal to buyers who aren’t interested in the high dues and stringent rules in a “cruise ship” style massive community.
Now is the perfect time to “catch the wave” and reach this valuable and underserved market. We’ll be in attendance at the upcoming International Builder’s Show discussing the untapped potential of this market and how you can take advantage.