Welcome to Topretirements.com, where active adults 55+ can find their best place to retire

January 30, 2008 — Florida — In a crushing 64% to 36% vote Florida voters overwhelmingly brought in a new wave of property tax reform in their state, passing Amendment 1. The amendment would lower property taxes. It increases the homestead exemption by $15,000, saving voters an average of $240. It also provides “portability” of protected assessed values for Florida residents, meaning that if they sell their homes and move to a new one they can continue to have a 3% cap on the assessed value for their “protected” amounts.

The Miami Herald said that “… passage of the plan is only the first phase of what ((Governor Crist) promised would be ”just the start” of a prolonged push to lower property taxes.” The paper mentioned that Florida’s the Taxation and Budget Reform Commission will consider other tax-cut ideas, including replacing the property taxes for schools with a sales tax on services.

The vote is considered a landmark victory for tax reform. Other states may be expected to follow, which could have enormous consequences for the budgets of local municipalities across the nation.

The real estate market in South Florida, one of the hardest hit regions of the country, affects thousands and thousands or baby boomers who are considering retirement communities there. Your Topretirements editor has been in the Sunshine State for the past several weeks - this report summarizes his microcosmic view of the Florida real estate market.

2005’s Unsustainable Price Increases
The recent history of home prices in this market is very instructive. (Note: all pricing figures are from the National Association of Realtors website). In 2004 the median selling price of a home in 5 of Florida’s major metros (Miami, Fort Myers, Tampa/St.Pete, Sarasota, and Orlando) averaged $212,000. A year later (2005), when speculators were waiting in line to buy condos sight unseen, the selling price for homes in those markets had jumped 35%, to $287,000. In 2006 prices were mixed; prices continued to increase in some markets and declined in others. By the 3rd quarter of 2007 the average selling price had declined to $271,000, still a significant 23% above the group’s 2004 median selling price.

Our conclusion is that - even without the sub-prime financial mess, speculation, or over-building - the price increases experienced in 2005 were unsustainable. When these other factors are added in, it is no surprise that real estate markets are hurting through much of Florida (although prices in Orlando have actually held up quite well).

Observations from a Secret Shopper
While in Florida we have had the opportunity to read about real estate, talk with realtors, and visit many properties for sale. Here are some general observations and tips that we offer for any baby boomer considering retirement here.

- The condo market is moribund. We visited a number of condos projects, both existing and new, with very few signs of life. In some new buildings not a single unit had been sold, even though the project has been on the market for more than a year. It would be very scary to be the first person to buy – but some one has to eventually! In existing buildings the problem is too many units for sale, at 2005 prices. If you are tempted to buy an unusually nice property, you should demand a sizable discount.
- Far too many homes for sale. In Key West, considered to be one of the more stable markets because of its steady tourist business, there are generally at least 2 homes for sale on every block. Many have been on the market a long time, and getting attention from buyers or brokers must be very difficult.
- There seem to be 2 groups of sellers (and this observation seems to be true just about anywhere in the country). The first group is stuck in the mind set of 2005 prices. They put their properties on the market at high prices, and no one is interested. The second group, sellers who know that if they want to sell their property they have to be realistic about their asking price, is in the ascendancy. Their properties are being looked at by buyers, who are making offers.
- In any market this uncertain there have to be some bargains somewhere. Some buyers have to sell. Others want to sell and know they have to be realistic. Anecdotal evidence from agents tells us that offers at 85% to 90% of the asking price have a good chance of success.
- Get a good broker. A poor broker will waste endless amounts of your time showing you only their listings, whether or not they are the best properties for your needs. A good realtor will ask you about your needs and pricing range, and then only show you properties that fit. The broker you want will only show properties that are fairly priced, and that are quality listings. If you feel your broker is wasting your time get another one, there are plenty to choose from.
- Foreclosures and forced sales. If the bank is taking over a property it might be prepared to make a good deal to qualified buyers. If you can pay cash, you are the kind of buyer they want. Ask your realtor to show you (quality) foreclosed properties, or at least explain to you what is involved in buying one
- Coping with the fear issue. If you decide to buy a home in Florida (or most any other state) you have be apprehensive with what you are reading in the news. But there are 3 positive factors to consider: 1) If you buy now you won’t be buying at the top, because prices have definitely fallen back. 2) Experts usually advise buying when fear is at its highest (and fear seems pretty high now!). 3) Many high quality properties are available now, so you are in a rare position to be very selective.

Good luck!

With many baby boomers expecting their first social security checks in the mail soon, the next obvious question is…. where will all of these boomers live in retirement? Indeed, a favorite baby boomer cocktail party conversational gambit these days is – “Where are you thinking about living in retirement?” With big events like this afoot, we thought we would try our hand at predicting 2008’s top 10 trends for baby boomer retirement communities. One thing is certain – baby boomers are so diverse that just about every retirement will be different. Here goes:

- Boomers will be wary of buying a property in 2008 over fears that they might overpay, or that their developer might go bankrupt

- The vast majority of baby boomers will stay in their own homes, but 25% plan on moving to another area (but mostly in their own area or state). Source: MetLife Mature Market study
- Baby boomers are looking for something different; cookie cutter developments are out
- They are going to seek out communities where there is a lot going on – college towns, urban environments, smaller towns with vibrant downtowns.
- Active adult communities with extensive and unusual recreational facilities are treasured. To a certain segment, “being green” is important
- Good transportation infrastructure is a plus – boomers don’t want to have to drive everywhere. Walking, biking, golf carts are OK; just so long as they don’t have to drive everywhere
- They will start investigating an active adult community near (but not too close) to their children or grandchildren
- The segment of baby boomers that the Age Wave consulting firm calls the “Live for Todays”, characterized as wanting to have fun but haven’t saved enough, will be attracted to expatriate retirement communities in countries like Costa Rica, Mexico, and Panama. Many of them will be disappointed to find out what it is like to live in the third world. But many more will be unhappy to discover how far that puts them from family members
- Marketers who continue to market to “seniors” will wonder why they have no customers. The average baby boomer doesn’t think he will be old until he reaches about 78 years of age. Active adults, or just plain “baby boomers”, will be the terms of preference to describe these retiring baby boomers
- For the first time in their lives boomers will be more concerned about property taxes than they are about the quality of schools in their new communities. States and communities with reputations for being tax and retiree-friendly will get a larger share of baby boomer retirees.
For more information:

New York Times article on baby boomers
Metlife Research Study

January 2 — The new year might have just rung in, but the news for buyers of retirement real estate is the same - buyers are cautious as inventory piles up, sales slow down drastically, and prices come down only slightly. A dire New Year’s Day front page headline in the Miami Herald screamed about “Home Sales and Prices” being in a “Nosedive”. But aside from the softness in the market for retirement communities, another worry has emerged - unfullfilled promises and communities.

One of the worst things that can happen to spoil an active adult community dream is to have important planned amenities not materialize. For example; a sleek clubhouse, 2nd golf course, or extra swimming pools that are promised - but don’t get built. Unfortunately the list of bad things that can happen doesn’t stop there. A builder may find that it is so strapped for cash it must sell off extra property, and the community loses control over what gets built there. One just has to read the newspapers to find out new problems one hadn’t even thought about.

Making the news in late December in the Maryland Daily Record were the woes of D.R. Horton Inc., which was sued by MTBR LLC for allegedly breaching a 2004 agreement to purchase 3 land parcels. The land was supposed to be part of the Bulle Rock complex near Maryland’s Havre de Grace. D.R. Horton Inc. is the nation’s 4th largest builder and just had its first loss in 15 years. Most of of the affected lots were targeted to be single-family houses.

Back in November a division of Levitt made news when the giant builder laid off more than 200 workers, defaulted on loans, and stopped building. Affected projects include Florida active adult communities such as the Seasons at Tradition (Port St. Lucie), the Cascades development in Sarasota, the Cascades at World Golf Village in St. Augustine. Projects in Georgia, South Carolina, and Tennessee have also been halted. One of the ones in South Carolina is its Murrells Inlet project, Seasons. As detailed in a New York Times article, “With Builder in Bankruptcy, Buyers Are Left Out“, residents of that community are upset by the many unfinished or unbuilt homes, including an unfinished community center.

Obviously, finished and more established communities would appear to be safer from problems with failure to deliver. But ample due diligence is always a good practice even before buying in a completely built out community (see 10 Questions to Ask Before You Buy). Most people rely on their attorneys to do a lot of that work.

Reputable sellers and developers encourage buyers to study all disclosure documents carefully. They have usually put protections, such as bonds and escrow funds, in place to protect buyers. They also want happy buyers, because bad publicity is so damaging and good word of mouth so helpful. Just make sure you take the effort to ask all the right questions - before you sign on the dotted line.