January 19, 2011 (Shirley Allen)
As a consequence of the housing bust and the drastic fall of home prices, more and more older homebuyers who would have previously used the proceeds from their previous home to buy a new home are now having to rely more on their savings to put money down for their new homes.
The information is revealed in a joint study conducted by the Housing Council of the National Association of Home Builders and the MetLife Mature Market Institute from recently released housing data from the Census Bureaus’ 2009 American Housing Survey on the 55-plus demographic.
The study, titled “Housing Trends Update for the 55+ Market,” reveals that in 2007, 92% of Americans 55 or older who bought a home used money from a the sale of a previous home for the down payment on a new mortgage. In 2009, however, only 55% were able to take the same route when buying a home.
The organizations said previous studies showed most homebuyers in that age range depended on proceeds from a home sale to finance a new purchase.
The MetLife/NAHB data confirms a recent Fannie Mae survey showing that the demographics of home owners are changing, as the homeownership rate among young adults decreased 11% from January to December. The survey also showed people between the ages of 65 to 74 are 3.5 times more likely to own a home than a person under 25.
According to the study, more than two-thirds of 55-plus households own a single-family residence, which is well above the rate of younger households. Additionally, 9% of the same demographic own a multifamily property.
Survey respondents reported the main reason they move is to be closer to friends or relatives. The design and look of the building where they were moving came in second.
Also of concern is the long term effect that the loss of savings will have on senior’s retirement.
Tags: housing bust, home prices, homebuyers, new homes, savings, 55-plus, new mortgage