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Awareness of Active Adult Housing Rising Sharply
Baby boomers who are in their mid-40s and older have a growing awareness of active adult communities, which will give builders and developers a marketing advantage in selling these homes to them, Margaret Wylde, of ProMatura Group, told the “Building for Boomers & Beyond: 50+ Housing Symposium” in Phoenix last month.
“There has been a huge statistical increase in awareness” of active adult housing, researcher Wylde said, “and the higher the awareness, the higher the market penetration and sales.” She attributed the growing interest in active adult to the proliferation of these communities nationwide and outside of their traditional location in Arizona and other pockets of the Sunbelt.
In a telephone survey earlier this year of almost 3,400 households in the 45+ age range, Wylde found that 84% knew about this product. Among those who were 60+, 87% of those participating in the latest survey were aware of active adult housing, compared to 62% in a similar survey in 1998 and 68% in 2000.
Of those surveyed, 15.6% said that they planned to move within the next five years, 54% of them within the same state, 11.2% to Hawaii, 9.4% to Arizona, 5.5% to North Carolina, 5.5% to Texas and 5.2% to Nevada. And 15.3% of those who said they plan on moving indicated that they were likely or very likely to buy an active adult home, indicating average annual demand for 248,888 homes over the five-year period, Wylde said.
But a more significant opportunity comes from the 54.4% who expect to be moving but are unsure if their destination is an active adult community, Wylde said. They average 883,523 annually over five years. “This is your market to lose,” she said, adding that “the more they know about active adult, the better.”
Going by zip codes, demand for active-adult housing ranged from a high of 20% in the mid-Altantic states to a low of under 12% in Nebraska, Kansas, Missouri and Illinois.
More than 50% of those surveyed said that they expected to purchase a primary, secondary or investment residence over the next five years, Wylde reported.
Wylde’s survey research zeroed in on a number of factors likely to influence the decisions of 45+ households who want to puchase a home in the next five years, and representatives from active adult companies supplemented her findings with anecdotal observations from their communities:
- Of those definitely in the market for active-adult housing, 70% said they would consider purchasing a one-story detached house, about 18% would be interested in two-story detached, 38% attached single-family, 21% a multifamily condo, 19% a cluster home and 4% a loft. Responses were fairly similar for those who might possibly buy into an active-adult community, with the exception of attached single-family, which was an option for 21%.
Bill Slenker, of Slenker Land Corporation, which has been building within and close to the Washington, D.C. area, noted that all of his company’s single-family and attached homes have second floors. “Everything is built on slab because active adults don’t want to go to the basement,” he said. “So the garage and the upstairs are for storage.”
- Of the households looking to buy an active adult home in the next five years, 33% said they preferred an automatic gate for community security, 23% a guarded gate and 22% a perimeter fence; compared to 24%, 16% and 16%, respectively for those who might possibly purchase an active-adult home; and 11%, 6% and 7% for those considering the general housing market.
Slenker said that gating runs counter to the trend he sees for connectivity throughout the community and to the outside of the community. Besides, 90% of the streets in his developments are public, “so we can’t gate.” His market research also found that surrounding neighbors didn’t like the idea that they wouldn’t be able to walk through a community and planners were against gates because they promote exclusivity. Slenker said that he has fenced his communities, but gates “are more feasible for some suburban projects,” he said.
A manned-gate can cost $150,000-$200,000 a year, Slenker added. In an active-adult community with 400 homes, “there are 400 watchmen looking out the windows every day,” and there is a safety net in place when most of the residents stay home instead of going to work.
Bonnie Hicks, of Robson Communities, said that all of her company’s communities are gated, with the exception of one, largely because most started out being on the fringe of development and not, as moderator Sheryl Palmer, of Morrison Homes, asked, because people are concerned about outsiders using recreational amenities. Those are only accessible by key or dialing in.
Historically, Pulte Homes has found no need to gate its large master-planned communities, said Ben Redman. However, guards do man the gates of Westpac’s country club communities, where “folks are very security-conscious, and also it’s a status symbol,” he said.
- In looking at what prospective home buyers in the next four years want, Wylde said that “it’s a myth that everybody is downsizing.” Roughly half of households currently residing in a home that is 1,601-1,800 square feet indicated that they would be looking for a larger house, and the percentage of those looking for something bigger increased as the size of current homes declined. Among those who now live in a home that is larger than 1,800 square feet, roughly one-third said they would be looking for something bigger. Among those who expect to be buying in an active-adult community, a bigger home is a primary or partial motivation for 22% of purchasers, while less space was desirable for 40%.
“In Southern California, there’s no interest in a small home,” said Wylde. “But in the Northeast, I’m amazed how much they’re willing to pay for a smaller home.”
In new age-restricted Del Webb communities, houses are getting larger, said Redman, and a high percentage of the residents do not live there full-time. “A bad housing product is a bad housing product,” he added, “but if you’re close to what consumers will accept, they also base their decisions on other factors besides the house.”
Hicks reported that Robson is retooling its first product series, bumping up homes in the 1,200-1,800-square-foot range to 1,500-2,100 square feet. Several two-story plans are also being added to the mix.
In the mid-Atlantic region, Slenker noted that “condominium and multifamily has arrived,” and the active adult market is becoming “as wide and as fragmented as the traditional housing market.” Condos in his communities average 1,500 square feet, but range from 1,400-2,200 square feet. Single-family homes are 2,000-2,400 square feet, and single-family attached are 1,500-2,000 square feet or larger.
Of buyers in adult communities, Palmer observed that “the first thing they will trade off to get the price they want is the size of the home.”
- Of those in the active adult market in the next five years, Wylde said about 64% reported they want a house that is more accessible and easier to use; 43% want only a new home; 82% want low-maintenance; 77% said walking trails are important; 88% cited the importance of sidewalks; and 59% said an upscale community entrance was important.
Wylde said that 5% wanted to be within walking distance of a hospital, 30% within a five-minute drive; 35% within a six- to 10-minute drive; and 24% within an 11- to 20-minute drive. Proximity to good restaurants and a major airport were also important.
“There is a huge focus on amenities,” in Westpac communities, said Redman. Compared to earlier communities, today’s “fitness centers are double the size and being used by twice as many people,” he said. “There are more hiking trails instead of golf,” and continued education is important.
- To finance the active-adult home they expect to buy in the next five years, Wylde said, 30% will purchase the property outright, 40% will pay for most of it but take out a small mortgage and 20% will mortgage most of it. About 5% said they will rent.
 Find Out What the 55+ Market Wants
“Boomers on the Horizon,” available through BuilderBooks.com, can help you better build and market homes to this age group. Capitalize on the niches, needs and opportunities of this rapidly growing market by learning their preferences.
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