New research by the NAHB's Paul Emrath found that 55+ households make up 20.9 percent of all new home buyers and 24.3 percent of new custom home buyers.
"There is a market for this segment, but you really have to know what you are doing," said Emrath, NAHB's assistant staff vice president of housing policy research, who released highlights of the study during a press conference Thursday at the International Builders' Show in Orlando, Fla.
Emrath said the good news for builders is that many of these buyers have accumulated wealth over the years and can pay for new homes by selling their existing homes. He said the vast majority of people age 55 and above tend to be happy with their current homes, so the challenge for builders is to develop products that will be attractive to these buyers.
"What we're finding is that people are not moving that far away from where they lived and worked and raised their families," said panelist Mark Stemen, senior vice president of active adult for K. Hovnanian's Landover Group.
"We look for sites that are about an hour's drive from those central locations," said Stemen, who said in the Washington, D.C., region for example, they tend to look for sites in Delaware or on the Eastern Shore of Maryland.
The other builder panelist, Bob Tippets, of Village Communities L.C., a developer of active adult communities in Northern Utah, said he tries to build near golf courses and restaurant, retail, and medical facilities.
"The idea is to build where the amenities are provided by the community at large," Tippets said, adding that it saves costs when he doesn't have to build all the infrastructure from scratch.
Tippets said there's a vast difference between the World War II and Silent Generation buyer and the upcoming Baby Boomers. He said the older generation was debt averse, modest in their choices of upgrades, and preferred smaller homes.
In contrast, the boomers carry more debt, prefer larger homes, and will spend money on upgrades.
"We see lots of options for media rooms," said K. Hovnanian's Stemen. "Our buyers in the D.C. market are very computer savvy, so they really need to have high-speed Internet and have the wiring that lets us add any of the new technologies that come along," he concluded.
Tippets said while security is important and many of his buyers are interested in the technology, he has to strike a balance and try to make the applications easy-to-use.
"I can't tell you how many calls I've gotten from people who can't use their thermostats, so we try to make it simple," he concluded.