Across the nation, 50+ builders are now focusing on the more affluent baby boomers. In fact, this market is considered a “sweet spot” in the new construction market, according to the National Association of Home Builders and John McKeown, president of Conemarra Partners.
With this trend is a shift to active adult housing in more urban environments that showcase smaller sized townhomes in a larger community environment such as Downtown Cleveland, Lakewood, Shaker Heights and Cleveland Heights.
“The homes should be priced in the $400,000 to $500,000, range and targeted to ‘prime movers’ with more than $100,000 in annual income and at least $400,000 in net worth. This encompasses roughly one-quarter of the nation’s 46 million baby boomers,” said McKeown.
“Initial efforts should focus on today’s 52- to 62-year-old ‘zoomers,’ whose ranks are 24 million strong,” he indicated. “These are the trend setters. They represent key branding opportunity and will influence the direction taken by the 22 million 44- to 50-year-olds who constitute the second wave of boomers.”
Research indicates that 69 percent of the older boomers and 71 percent of the younger boomers will probably buy another home. High-net-worth boomers are projected to purchase 7.7 million homes through 2020. Of that amount, potential demand for active-adult retirement communities will reach 1.9 million units.
Demand is expected to reach a peak between 2012 and 2015. It’s projected that by that point, two million boomers each year will reach the traditional retirement age of 65. And under current projections, it looks like potential demand for active-adult housing will begin running higher than supply to a significant extent. In fact, it’s estimated that there will be a total shortage of 350,000 active adult homes by 2020.
Boomers reinvent themselves again
According to McKeown, baby boomers are predisposed to favor a lifestyle and amenities over housing affordability. They are about to reinvent themselves again. The economic downturn has provided a catalyst that has got them thinking about what the next stage of their life will be.
“Active adults are now a platform,” he said. They are more flexible about where they want to live, and they are looking for a more urbanized experience. They want engagement.”
“Active adults are now a platform,” he said. They are more flexible about where they want to live, and they are looking for a more urbanized experience. They want engagement.”
According to the national statistics, only 11 percent of baby boomers suffer health problems that restrict then from pursuing an active lifestyle, and they command roughly two-thirds of the nation’s household wealth.
“Boomers have seen a $3.3 trillion drop in the value of their real estate over the past 12 months, and their retirement savings have eroded by 20 percent or $2 trillion,” said McKeown. “Recovery traditionally lags in the retirement and second-home markets, and retirement demand has been delayed by the downturn for two three years.”
According to findings from a January survey of people who moved to active adult housing in the preceding two years, “buyers, among all income levels, were left with $185,000 in equity after paying off their mortgage, and many were trading up to a more expensive home. Those who bought a new home in the $450,000 to $500,000 range sold their previous home for an average of $606,000.”
Moving to towns and cities
While about half of all baby boomers now live in the suburbs, only 28 percent viewed the suburbs as their ideal location for a retirement home. About one-fifth currently live in an urban location, and 35 percent said that that is where they would like their home to be. Sixteen percent live in a small town, but 21 percent would like to retire to one. Twelve percent live in a rural area, and 18 percent view that as the ideal place to retire.
“They want to get out of isolated, car-dependant situation,” he said. “They want to be in a traditional neighborhood or community” with higher density, walkable neighborhoods, and greater access to shopping and culture.
According to McKeown and market research, the village or town center has replaced the clubhouse as the next significant community gathering place for active adults. Boomers are even willing to forego an onsite fitness center when one is close to where they live. McKeown predicted that there will be greater geographic diversity in the location of active adult housing. He said that there will be a growing opportunity to sell homes in smaller communities, that are below 300 units, to affluent baby boomers.
McKeown feels that builders should put less emphasis on age restriction and more on age targeting. Seventy percent of the boomer market prefers the latter, he said. “Baby boomers show the greatest preference for single-family homes, but acceptance is widening for condos and townhomes provided that they are served by elevators. First-floor living, energy efficiency, low-maintenance, and green-living are all housing characteristics that zoomers prefer. Aging in place and downsizing to homes in the range of 1,500 to 2,000 square feet are also today’s preference,” he indicated.
For more information on urban living, contact Scott Phillips Jr. of Keller Williams Realty Greater Cleveland at Scott.Phillips@kw.com and 216.373.6959.
(article courtesy of Live.com and the Cleveland Plain Dealer)
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