Aging Boomers Want More Modest Homes and Easy Living
The current housing downturn has taken some steam out of housing demand from the 55+ population, but a “55+ Housing: Builders, Buyers and Beyond” survey conducted in February by NAHB and the MetLife Mature Market Institute identifies significant opportunities in this market for both builders and remodelers at a time when a weak economy has forced households across the age spectrum to reassess how much housing they can afford.
The research was conducted largely to determine how well builders were meeting the preferences of this age demographic, and the results found that the industry was largely on the same wavelength as its potential customers.
The 1,500 consumers participating in the survey showed a strong preference for single-family detached homes in a suburban setting. Despite recent housing price declines, members of this group have retained considerable amounts of equity or other financial assets, giving them the wherewithal to purchase the relatively modest-sized homes that are shaping up as the mainstay of this market.
Low-maintenance and the availability of various services emerged as key concerns for 55+ households, and unlike their counterparts from just a few years ago, these consumers exhibited a strong desire for technology-driven amenities, particularly high-speed Internet access.
Compared with survey responses from 254 builders who specialize in the 55+ market, consumers were not as aware of many universal housing features as they should be. And like the general population, they started losing some of their enthusiasm for green building principles when it came time to start paying for products that are priced at a premium. Builders, the survey found, will have to lead and educate 55+ prospects in both of these areas.
At a Sept. 23 “55+ Housing by the Numbers — Part II” webinar focusing on the newly released survey findings, NAHB Chief Economist David Crowe noted that the market has gained some ground since the polling was conducted early this year, when consumers were watching their savings dwindle and builders were seeing sales grinding to a halt.
“But the study does reflect the very latest in the changing perceptions of what is most important in housing for this age cohort,” Crowe said.
A ‘McMansion Revolt’
From a builder’s perspective, a viable 55+ market is taking shape, according to Steve Bomberger, president of Benchmark Builders in Wilmington, Del.
“We are seeing purchasers looking for smaller or more modestly sized homes than in the past,” Bomberger said. Previously, it was common for the husband to come into the sales office and complain that the homes were too small. “We don’t hear that anymore,” he said. “Most 55+ households are not looking for the grandiose styles of the past; there is a McMansion revolt in the 55+ market.”
Survey results confirmed that most 55+ consumers are not interested in buying a larger home. Although preferences for size tend to increase with household income, the current home of those surveyed measures a median 1,886 square feet, close to their preferred median home size of 1,903 square feet.
However, Bomberger observed that it will be “a little tough” to include everything these buyers want in this sized home. More than half (51%) of the respondents preferred three bedrooms, and another 18% four bedrooms or more. They also wanted two baths and a two-car garage.
Bomberger said that his customers “are spending less on luxury.” They typically are looking at ceiling fans, sun room additions and finished basements — “an opportunity to get more space for the buck,” he said.
“It’s all about technology,” he added. “Today’s buyers are techno-charged,” and they are asking for computer niches, structured wiring, multiple television jacks, mounted flat TV screens, programmable thermostats and advanced security systems that include smoke detectors and fire alarms. “They are not afraid of gadgets that have a lot of buttons and a lot of lights,” he said. “Today’s buyer is computer savvy, a big change from 10 years ago.”
Prospective buyers have at least some knowledge of universal design, Bomberger noted, and he said he focuses on applying these features to the overwhelming desire in this age group for single-level living. A single-family home was preferred by 79% of the consumer respondents, and of the 15% who indicated a desire for two stories, about three-quarters said they wanted the master bedroom to be located on the first floor.
Bomberger said he tries to minimize steps at the entryways into the home, although that is not easily accomplished with most garages. As many roll-ups as possible are used for slab-on-grade construction, “and we do our best to minimize steps” into garages and basements, he said. However, he advised, “don’t put it in their face to remind them of future disabilities they may have.” For example, too many grab bars, which can be installed later as they are needed, can be a definite turnoff to these buyers.
“Having everything taken care of is the most important thing” in the minds of these buyers, Bomberger said. They don’t want to have to worry about raking the leaves, shoveling the sidewalks or cutting the grass.
He said that it is important for the builder to know what services their buyers are looking for and then determine what they can and cannot deliver. “We have a high preponderance who would like in-home maintenance and remodeling. This is not our expertise, so we try to refer them to a contractor.”
In a look at services and amenities, the survey found that twice as many consumers want transportation services and minor or major home repairs as those who currently have them; three times as many want van service and partial housekeeping and four times as many want home-delivered meals and personal care services.
The survey reported that builders, in choosing a site, focus on proximity to a shopping center (70%), walking/jogging trails (58%), a hospital or doctor’s office (55%) and churches (53%).
In the meantime, 55+ consumers said they considered the following home features as most important: a kitchen open to the family room (73%), a washer and dryer (rated 4.5 on a five-point scale), ample storage space (4.3 out of 5), windows that open easily (4.2 out of 5) and easy-to-use climate controls (4.2 out of 5).
Survey research has found that 90% of 55+ home buyers are moving either within the same general area or from a different part of the same state. And their primary reason for making the move, cited by 63%, is to be able to realize a maintenance-free lifestyle. Forty-six percent said their motivation for moving was to be closer to family or friends, and 32% said they were attempting to lower their living costs.
Hunkering Down for Tough Economic Times
As virtually every segment of the nation’s housing industry, 55+ housing has seen demand significantly dampened by the current housinig downturn. 55+ households have been stymied in their ability to sell their existing homes by a lack of available buyers. There has also been reluctance to sell at the rock-bottom prices it can take to be competitive in the current marketplace. A sharp decline in 401(k) and other investment retirement plans last fall was further discouraging news for these prospective home buyers.
February’s surveying found a distinct minority of 55+ households identifying themselves as potential home buyers, but Crowe pointed out that these translate into substantial numbers because of the large size of the post-World War II baby boom that will be fueling increases in the size of this population in the years ahead.
Ramps and a stepless threshold at the entrance of the Eskaton National Demonstration Home.
Sixty-three percent of the 55+ consumers who were surveyed by NAHB and MetLife said they were planning to age in place in their current home and 26% weren’t sure, leaving roughly 12% who said that they would be purchasing another home. Of those who indicated that they would be eventually moving, 8% said they planned to buy a home within three years and another 4% said they would start looking after three years.
About 56% of 55+ households currently live in communities where there is no predominant age group, the consumer survey found. Only 9% of the respondents live in an active adult, age-restricted community; 7% live in a community where there are no age restrictions but most buyers are 55+; and 28% reside in an independent living community.
The data indicated, however, that many in the 55+ age group would consider other options. Twenty-two percent of the respondents said they would consider moving to an age-restricted active adult community and 27% would consider a community where 55+ households predominate with no age restrictions. Another 28% would consider moving to an independent living community.
Survey responses found that there is some discrepancy between the cost of the 55+ product being built and the amount that the market will bear. Consumers said they were willing to pay just under a median $190,000 for their home, but builders reported they were producing homes with a median value of $287,000.
Unsurprisingly, not too many 55+ buyers appear to be in the mood for climbing further up the housing ladder. Forty-six percent of the builders surveyed said their customers were purchasing homes at the same value as those they were selling and 31% said they were buying less expensive homes than they formerly owned.
Preferences for financing were similarly conservative in this group. A 30-year fixed-rate mortgage was preferred by 41% and a 15-year fixed was the choice of 38%. Five percent indicated interest in a reverse mortgage.
However, 55+ home buyers are largely prepared to plow some of their wealth into their home purchase to scale down mortgage debt. Twenty-three percent said they would pay for their home in cash and 60% responded that they would make a high downpayment of 30% or more. Sixty-nine percent identified equity from their current home as the source of their downpayment; 28% said it would be drawn from investments.
Forty-one percent of the builders reported using price discounts last year as incentives to promote 55+ housing sales, 35% offered upgrade packages and 22% kicked in a free option, such as a third bedroom. However, 41% offered no special inducements at all.
Leading the Way on Universal Design
Survey findings indicated that builders will have to lead the way on universal design and green building, according to John Migliaccio, director of research for the MetLife Mature Market Institute, although 55+ households can be expected to become progressively more familiar with these concepts.
Undercabinet access is available under the countertop and kitchen sink to provide stool or wheelchair access in the Eskaton home.
“Builders do get the message about the importance of universal design,” Migliaccio told the webinar audience, and they are already providing the basic universal amenities, including: lever-handle doorknobs (80%), wider doorways (77%), wider hallways (72%) and separate showers and baths (65%).
But consumers clearly underestimate the value of these features, he said, rating them quite low compared to builders. Only 30% said they would be eager to get their hands on a lever-handle doorknob and less than half saw much purpose in wider doorways (48%), wider hallways (45%) and a separate shower and bath (48%).
The universal design features rated by consumers as somewhat to very important included: bigger bathrooms (64%), a full bath on the entry level (61%), extra lighting (56%) and non-slip floors (52%). Rated low were: lower electrical switches (15%), seating in the bathroom (22%), a shower without doors (23%) and higher electrical outlets (25%).
Migliaccio said that builders should keep in mind that most consumers are typically not living in a home or community designed for 55+ residents and may not have had the opportunity to experience universal design features. As they become increasingly more familiar with them, universal design features will eventually become as popular as cell phones and computers, he predicted.
On the green home building front, many environmental features curried favor with the 55+ consumers surveyed, he said, including: energy-efficient appliances (79%), solar heating (63%), a water filtering system (58%) and allergen- and chemical-free building materials (42%).
But 55+ respondents revealed a disconnect in their willingness to pay for green amenities. About three-fourths said they would be willing to pay for high-efficiency heating, ventilation and air conditioning equipment, low E-glass, energy-efficient appliances and sealed joints. But far fewer were interested in paying for the preservation of open space (46%), low VOC paints (37%) and alternative building materials such as oriented strand board and engineered wood (37%).
Ninety-four percent of the builders reported that their buyers want more energy-efficient new homes; 55% said buyers specifically want Energy-Star rated homes.
The research in “55+ Housing: Builders, Buyers and Beyond” is the second part of a series. Released in April, the first-part, “Housing for the 55+ Market: Trends and Insights on Boomers and Beyond,” includes an in-depth profile of the 55+ market based on figures from the U.S. Census Bureau’s American Housing Survey from 2001 through 2007.
For further information, e-mail Ann Marie Moriarty at NAHB, or call her at 800-368-5242 x8350.