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Older buyers relying on savings for down payments

January 18, 2011 - In past years, older Americans moving to a smaller home would likely be able to afford their home purchase solely on the proceeds from their former property's sale.

The economic downturn and falling home prices have eliminated that reality, and more older homebuyers today are having to tap into their savings account for a down payment, said a report. According to the National Association of Home Builders and the MetLife Mature Market Institute, only 55 percent of consumers who moved to an active adult community in 2009 paid for their down payment with money from a previous home sale. That was down significantly from 100 percent in 2005 and 92 percent in 2007.

The report added that 45 percent of those older buyers had to rely on their savings account for a down payment. In 2005 and 2007, no buyers reported tapping their savings for that expense.

Additionally, the report indicated that active adult communities could be in higher demand as baby boomers continue to age.

"By the year 2020, as baby boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old," said David Crowe, NAHB’s chief economist.

That fact may be a reason why members of the construction industry are reporting increased confidence in the adult rental community sector, as the NAHB showed in a November report.
 

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