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36 THE BOOMER BOOM IN 55+ HOUSING Builder confidence is up in the single- family 55+ housing market, according to the latest 55+ Housing Market Index (HMI) from the National Association of Homebuilder (NAHB). e Index score rose to 66 in Q 4 2018, up six points from the previous quarter. "Overall, builders and developers in the 55+ housing market are reporting strong demand across the country," said Chuck Ellison, Chairman of NAHB's 55+ Housing Industry Council and VP-Land of Miller & Smith in McLean, Virginia. "However, builders need to continue to manage rising construction costs to keep homes in 55+ communities at affordable price points." All three components of the index, including present sales, expected sales, and prospective buyer traffic increased in Q 4. Present sales rose six points to 72, expected sales for the next six months increased five points to 70 and traffic of prospective buyers jumped 10 points to 53. e 55+ HMI measures two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each segment of the 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six- month sales for that market are good, fair or poor (high, average or low for traffic). NAHB also notes increases in the multifamily 55+ condo market, with a three- point gain to 47. e index component for present sales for condos increased three points to 51, expected sales for the next six months fell four points to 49 and traffic of prospective buyers rose seven points to 38. In the 55+ multifamily rental market, two out of four components saw increases. According to the NAHB, present production increased six points to 60 and present demand for existing units rose four points to 67, while future expected production and future expected demand both fell two points to 54 and 62, respectively. "Like the broader housing market, the 55+ HMI is benefitting from the recent decline in mortgage rates," said Robert Dietz, NAHB Chief Economist. "Favorable demographics and solid homeowner wealth should continue to support demand for new 55+ housing." A NEW VISION FOR HOUSING FINANCE REFORM A decade after Fannie Mae and Freddie Mac were put under the conservatorship of the Federal Housing Finance Agency (FHFA), the voices for housing finance reform are getting louder. While Sen. Mike Crapo released an outline of what housing finance reform should look like in February, the National Association of Realtors (NAR) collaborated with Susan Wachter, the Albert Sussman Professor of Real Estate Finance at e Wharton School of the University of Pennsylvania, and Richard Cooperstein, Head of Risk Management at Andrew Davidson and Company, Inc., on new research that explores the ideal restructuring of the secondary mortgage market. e research was released as a working paper by NAR recently and proposed a "redesigned alternative based on economic principles and national objectives." It explained why housing finance markets differ from purely competitive markets but are similar to those for public utilities, thus informing the "nature of reform needed to ensure financial stability going forward." e working paper touched upon six key initiatives that could be implemented to realize the vision of holistic housing finance reform. ey included: » Leveraging reforms and innovations implemented since the crisis while completing the process with instrumental updates for a fully functioning liquid market » Promoting competition in the secondary market through proven structures to correct market failures » Preserving the 30-year fixed-rate mortgage and focusing the mission on liquid secondary markets for Middle America and underserved borrowers » Minimizing the cost to consumers in normal stress periods while maximizing access for creditworthy borrowers » Protecting taxpayers by using private capital » Maintaining simplicity in the transition while avoiding market disruptions e research revealed that the vision of a reformed housing finance market first recognized the critical role of the government- sponsored enterprises in housing finance, which was the same need that led to their initial creation. It also built on the transformed enterprises following conservatorship and codified a structure that was "effective, resilient, and fair, balancing the tension of private operating companies with the public mission." In Q4 2018, the builder confidence index for the 55+ housing market rose to 66, according to the National Association of Homebuilders. KNOW THIS

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