What’s Happening in the 55+ Housing Industry?
This is the second article in a four-part series on how real estate investors can leverage their commercial development experience in growing sectors like 55+ housing. To read part one in the series, click this link Slowdown in Hotels and Multifamily Housing Means Timing is Ideal to Explore New Real Estate Opportunities. To read part three in the series, click this link Room for Growth in 55+ Housing Industry.
Natural Disasters Cause Dip in Builder Confidence, but Optimism Remains High
The third quarter saw a slight dip in builder confidence in the 55+ housing market, but overall optimism remained high. The National Association of Home Builders (NAHB) 55+ Housing Market Index for single-family housing dropped seven points to 59 last quarter, but it was the 14th consecutive quarter with a rating above 50 – a positive for the industry, overall.
Last year, a number of natural disasters occurred across the U.S., including hurricanes and wildfires. Other challenges included labor, land and building materials. Both of these factors affected the lower rating toward the end of the year, but the 55+ housing market is projected to stay strong in the future.
The Effect of Hurricanes and Wildfires
The survey for the NAHB index was conducted at the end of September after hurricanes hit Florida, Texas and other parts of the Southeast and wildfires blazed throughout the western part of the country.
For example, Hurricane Harvey destroyed an estimated 30,000 homes and tens of thousands of additional homes were damaged, according to the Greater Houston Builders Association. With so many homes needing repaired, construction wait times and delays for pre-planned construction have been put on hold and labor costs have increased as the need for construction workers rise.
Unlike the flooding in Houston, Hurricane Irma’s extreme winds caused most of the damage in Florida. With thousands of people needing to repair roofs and windows, we may see anegativeimpact on materials throughout the country.
Even before the back-to-back hurricanes and wildfires hit this fall, there was a lack of construction workers and rising material costs in the U.S. After the recessionin 2007, many construction workers moved to other industries, countries or have retired. According to the NAHB, the home building industry employed 3.4 million workers in April 2006, which has decreased to 2.7 million as of 2017. Now that the housing market has regained its strength, the lack of workers has been an ongoing challenge for builders, combined with the damage from the hurricanes and wildfires last quarter.
55+ Housing Outlook Remains Positive
The 55+ detached condominium industry in particular is expected to continue growing despite the challenges 2017 presented.
“This is a temporary effect,” said Dennis Cunningham, chairman of the NAHB’s 55+ Housing Industry Council. “Overall confidence remains high and builders continue to be optimistic about the 55+ market in the long run.”
In addition, approximately 32 million Baby Boomers plan to move, according to Metrostudy, leaving plenty of buyers for the 55+ housing industry and good reason for the confidence rating to stay positive.
Interested in Learning More?
Check out part three in our series by clicking this link Room for Growth in 55+ Housing Industry.
You can also download our free e book on leveraging hotel and multifamily housing development experience in the growing 55+ housing sector by clicking the button below.