Meet the New Boss - Your HOA

Many people moving into an active adult community will find new meaning in the lyrics from that great 70’s song by The Who, “Won’t Get Fooled Again”. In the song the punch line is “Meet the New Boss, Same as the Old Boss”. That’s where Pete Townsend warns that “the new revolution” might not be any better than the last one. The parallel for baby boomers moving into a 55+ development applies to the Home Owners Associations (HOAs) that govern most these communities - be careful what you are buying into.

The subject of Home Owners Associations is a very complex one and cannot be adequately covered in one short article. In this piece we will try to lay out some of the broader issues that you should be aware of when moving into a community governed by a Home Owners Association.

If you have been living in the suburbs in a single family house for the last 30-some years, you might not be prepared for the minutiae that your new Home Owners Associations is lord over. To name just a few such rules:
- Dress code in public areas; joggers must wear shirts, cover-ups in common areas, etc
- Pets can’t weigh over (25, 40, ?) pounds
- Number and breed of pets is restricted
- Use of common areas like pools, picnic areas, and trails prohibited after (9, 10, ? PM)
- Renters must rent for at least (1, 3, ?) months (or no renting at all)
- Renters cannot use certain facilities on same terms as owners
- Parking restrictions apply by location or type of vehicle
- Guest restrictions
- And on and on and on

This is not a piece against Home Owners Associations. They are an important and welcome component to successfully living in a 55+ or condominium development. These organizations are essential to the effective operation of any community: they set the rules, enforce compliance, manage the assets, and look out for the financial and legal well being of their communities. The people that volunteer for these boards tend to be unsung heroes - they work hard and they spend a lot of time unraveling really thorny questions. Far too often their only reward is to be interrupted and criticized everywhere they go by someone whose narrow self-interest was affected by a policy or rule.
Some folks have a constitutional inability to live around rules. Those people might want to think twice before moving into a community with an HOA, because the association is going to have a lot to say about what goes on (or doesn’t go on) in their new community. As an extreme example, if they want to have junk cars or funny lawn ornaments in their yards, or have a pen full of barking beagles, an organization with an HOA is a bad fit.

Regardless of whether you go into your new community positively or negatively disposed towards HOA’s, here are some considerations you should keep in mind.

1. Due diligence. Before you buy your new home find out as much as you can about your HOA. Read the rules, check out the minutes, and assess the financial condition of the HOA. This step is crucially important so you are not surprised later on.

2. Be aware of the law. Some states, notably Florida and California, have extensive laws regulating Home Owners Associations, while other states have almost no law on the subject. You should be assured that your association is following both the regulations and best practice. For example, you generally have a right to prompt and accurate minutes of official HOA meetings.

3. Learn about the problems your community might be facing. Some issues to be concerned about: foreclosures or delinquent dues; excessive litigation with neighbors, former owners, or tenants; overdue major maintenance items (and funding thereof).

4. Who are the people on the board? It is always wise to meet with at least some of the current board members. Ask them about the big issues facing the community and get a sense for their qualifications and ability to handle them. The quality and expertise of the board is extremely important to handle the significant issues they face.

5. How effective and how prepared is the HOA for handling troublesome issues? Until you move into a community you probably aren’t aware of all of the issues that need to be managed - it can be almost as complex as running a small town or a very large business. Some of these include:
- Major maintenance sinking funds (money put aside for future major projects like paving, roofs, elevators)
- Annual fee increases, assessments, and budgets. What is the history of increases? Look for an organization with steady, modest increases and an absence of unexpected assessments. Erratic fees and unpleasant surprises are usually a sign of ineffective management
- Insurance. Is the HOA adequately covered for legal and natural disasters? Are they paying too much or have the wrong policies in force?
- Pets. Few issues cause more trouble between sometimes oblivious owners and touchy non-owners. Sizes, breeds, numbers, access to facilities - the potential areas for conflict are legion
- Renters. How long (or how short) can they stay, do they have equal access to facilities?
- Visitors and family members. What are the rules about visitors, especially younger people in a 55+ age restricted community?
- Facilities. Go to just about any facility (swimming pool, exercise room, etc.) within an active adult community and look for the list of rules. Dollars to donuts the list of potential infractions will be long and onerous. That’s because someone, somewhere, was inconsiderate. Once they annoy the wrong person, a rule will come out to try to control that issue.
- Water leaks. In many communities water leaks, particularly in unoccupied units, are a major issue. Are there policies and procedures for prevention and remediation?
- Environmental problems. Mold, asbestos, chinese dry wall, leaking oil tanks, natural disasters - all of these issues must be handled intelligently.
- Personnel. An HOA usually has employees - sometimes a facilities or property manager, a business manager, security guards, maintenance personnel, clubhouse and possibly restaurant workers. Does the HOA hire effective managers and monitor and review their performance?
- Rule making history and enforcement. An effective HOA has to be a bit like Solomon. They must have specific and general rules in place to cover most contingencies, and be prepared to reasonably address problems that come up unexpectedly. Look out for long lists of petty rules that try to cover every narrow issue that ever emerged. On the other hand when truly troubling issues come up, like one we know of where a disturbed adult child continually harassed his neighbors, is the board up to the task of removing the source of trouble?

6. New communities often have a bigger challenge. A new development generally forms an HOA soon after the first owners move in. At the beginning there might not be a big talent pool to draw from, and there is no institutional experience. So the new HOA’s track record might be rocky at first.

7. Be prepared to serve. Like we said earlier, there is no great reward for serving on a volunteer HOA board. But somebody has to do it to ensure the success of the community. Particularly if you have management, legal, or building related skills; and especially if you have common sense, volunteer to take your turn on the board. Someone has to run the place; you might as well know the person doing the job!

For further Reference:
Wikipedia article on Home Owners Associations (very good)
Community Associations Network
Community Associations Initiative
When Active Adult Communities Go Bad

10 Steps You Must Take Before Buying in an Active Community

Our latest installment, “When Active Adult Communities Go Bad“,  might have put the fear of the Lord into many of our readers.  This week’s article is intended to provide the basic steps you can follow to minimize your risk in buying into an active adult community, and help you take advantage of the many bargains out there in the market.

The topic is particularly important in 2009 because the housing market is in such turmoil. As the expression goes, a rising tide lifts all ships; unfortunately the converse is true today. Things can go very wrong in a down real estate market, so extra caution is well-advised. Here are our top 10 Self-Defense tips (and of course start with this one:  Find an ethical, knowledgeable real estate agent and use his or her advice wisely).

1.  Don’t be the first buyer (or one of the first). These days there are no guarantees a community will ever get finished, or sell out.  If it doesn’t get built the way it’s promised, you could be living in a ghost town.

2. Go with reputation. America’s top builders with solid financial numbers are generally a safe bet. They have the marketing and financial muscle to finish their communities, and you have less chance for getting burnt.  Not to say there aren’t many local developers with blue chip reputations.

3. Practice your due diligence. Regardless of who you buy from, dig into  the company financials. Interview current residents and neighbors.  Has a 55+ community been renting to anyone just to pay the bills (and jeopardize its age-restricted status or have undesirable neighbors)? Google the project to look for controversies or legal issues you might have overlooked.

4. Consider a resale unit. In many active adult communities today local real estate agents have a long list of attractive properties. Their owners are eager to sell, usually at a lower cost than a comparable new unit. Often these homes  have the kinks worked out, and there might be additional improvements you won’t have to pay for. On the downside, you might not qualify for a warranty or have little recourse.

5. Scrutinize the Home Owners Association (HOA). Effective HOA’s are a lifesaver. Well-run associations run a tight financial ship; they won’t ignore bills that could lead to your community going bankrupt. They enact meaningful and fair rules to protect everyone’s assets. They fight for the community’s legal rights vs. the developer to make sure that the community’s interests are served.  The converse is true too.  Inbred, lazy, or unskilled associations drop important balls.  Everything is fine until one day you find out that bankers have foreclosed and you are about to lose your golf course or community clubhouse.  If you want to see what can happen when condo associations go bankrupt, read this article: “Condo Associations in Bankruptcy“.

6. What is the Reserve (Sinking) Fund status. A reserve fund is essential. It puts away money every year to pay for future major capital costs like a new roof, road resurfacing, or utility lines. If inadequately funded, some day you could face a bankrupting assessment.

7. Assessment History. Find out if there have been assessments in the past, and for how much.

8. Relationships with the Developer. Research and interview to find out how the relationship between owners and the HOA is going with the developer.  There will always be issues, but look for a relationship that is cooperative and friendly.

9. Home Inspection. Always, always pay a professional for a home inspection. Even a new home can have serious problems.

10. What else could get built nearby? Too many people have bought into an idyllic setting, only to smell the bulldozers clearing that forest across the street.  Find out what protections there are for any views or undeveloped areas.

Finally, invoke all your common sense.  There are many excellent bargains to be had today. Careful buyers  can make some smart investments. Just make sure you do your homework before you turn over that deposit check!

For Further Reference:

10 Questions to Ask Before You Buy

When Active Adult Communities Go Bad

Community Associations Network (an excellent resource about HOA’s)

When Active Adult Communities Go Bad

With prices in some very interesting active adult communities sliced in half from just 2 years ago, it is tempting to buy a retirement home. But as many thoughtful people have pointed out, those bargain prices could have some high costs associated with them.  This article will attempt to point out some of the pitfalls.

The Tideland Condos, of the Palm Coast, Florida is just one example of a community where bargain prices abound. Condos with 2 or 3 bedrooms that were originally priced at $350 - $500k are now offered in the low $100’s according to some reports.  There are plenty of other examples as well, and many of these communities are very tempting - great homes with plenty of amenities in desirable areas. Their prices have probably come down mostly because of timing - they came on the market just as the market collapsed.

But buying a bargain active adult community is not without its perils.  Here are some of the chief problems:

1.  Many existing owners might be underwater on their mortgages. Since they owe more than their unit is worth, many will walk away, leaving foreclosed homes in the development.

2.  Ongoing maintenance costs do not change much, regardless of how many homes are unsold or in bankruptcy. As the number of active owners go down, the common fees per homeowner must necessarily go up.  Because even more homeowners could be driven out by the increase, it is impossible to predict what the charges might become.

3. Foreclosed, abandoned, unsold, and unbuilt homes hurt property values - so resale values go down further.  Some communities will probably become ghost towns, at least temporarily.

4.  The development could go into bankruptcy. This can happen whether it is owned by a developer or by a Home Owners Association (HOA).  This adds more negative fuel to the fire.

5.  Immense legal problems can develop in a bankruptcy or change of ownership. An unfortunate drama like that is now playing out with the Four Seasons at Charlottesville, a community that was recently auctioned off on the Courthouse steps.   Only 83 homes are currently occupied of the 650 that were originally planned.  The new owner believes that the development’s large clubhouse with indoor pool belongs to it, whereas the HOA contends it owns the clubhouse. A legal battle is playing out now for control. Even if the HOA does end up controlling the clubhouse, the reduced number of homeowners means that owners might have to pay as much as $650 per month to maintain those common areas.

6.  Similar problems are occuring in many high-end developments with fancy golf courses and other facilities. Expensive equity country clubs with $100,000 entrance fees might now find themselves either becoming semi-private courses, or they and their extensive cost structures might force their developments into bankruptcy.

7. Communities might not go bankrupt but they could default on loans or loan commitments. This in turn could result in liens being attached to all homes in the development, a serious impediment to resale.

8. A different kind of problem recently came to light at The Villages, the giant active adult community near Ocala, FL.  There a court case seems to be determining that its Community Development Districts (similar to a Home Owners Association) paid too much for the common areas like golf courses it bought from the developer. Now the tax-exempt status of the bonds used to finance the purchase is being challenged by the IRS, which could lead to much higher common fees in the future.

9. Developments can fall behind on taxes, causing more liens and fines.

10.  A more hidden problem usually also occurs when a development is at less than full occupancy. The community’s contingency funds, the money banked over the years to bankroll expensive infrastructure repairs like roofs and roads, are usually stopped or spent. So in future years homeowners could face big and unexpected assessments when those repairs must be made.

11. Another problem tends to occur in active adult communities that are not finished. If the developer runs into financial trouble some of the planned amenities (like the clubhouse, pool, or clubhouse) might be cut or down-scaled. This can lead to more legal troubles and other disappointments.

12. Desperate owners and developers who need cash could lead to yet more problems. Renters can be less than ideal neighbors, and if too many people move in who are less than 55 years of age, the community could lose its age-discrimination protections as a 55+ community.

These problems might discourage you from acting on your impulse to purchase that bargain active adult community. Nevertheless there are plenty of reasons why a purchase now might be a smart move.  In the next installment we will explore the steps you can take to protect yourself in a bargain purchase.

For further reference:
10 Questions to Ask Before You Purchase in an Active Adult Community

Why Not Live in an Award-Winning Community

Special thanks to OldNassau, our member who sugggested this important topic.

What Can You Add to Our List? Please use the Comments section below to put in your 2 cents.

Just what is a 55 plus active adult - and why should I care?

The first part of the definition is easy - there are a lot of people who are 55 years of age or older. By the year 2010 there will be 74 million people who fit that category in the U.S. - nearly 1 in 4 people.

Arguably the term “55 plus active adult” includes just about everybody in this age group-except for those in prison, hospitals, or who live a sedentary lifestyle. But realistically, the term “active adult” is more of a marketing handle than anything else.

By applying the the term “active adult” to products, usually active adult communities, it immediately puts a lot more marketing fizz on the development than say – “passive adult communities”, “inactive adult communities”, “old people communities”, or “senior communities”.  “Active adults” serves a very important function for baby boomer marketers, because it allows them a safe handle for addressing a group that doesn’t want to think of themselves as old! According to a Wikipedia article the term, “active adult retail” is credited to Rick Abelson. We are not certain who first coined the term “active adult community”.  If any alert readers happen to know or have a lead we could follow on that factoid, please use the Comments section below.

Why Should I Care
If you are lucky enough to be an active person – enjoy it!  If you are considering living in an active adult community, consider if the amenities offered are up to your personal standards for activity.  Golf is an active pursuit in our opinion, although there are those who would differ. If you like jogging, tennis, biking, and exercise – but the community you are considering offers shuffleboard and bocce–the developer is appealing to active adults who are probably a lot older and quite a bit less active than you consider yourself – so evaluate your purchase decision in that light.

Villages CDDs Get Proposed IRS Settlement

Update: July 27, 2009.  As promised, the IRS has expanded its audit of the tax-free status of more bonds after failing to reach a settlement with Community Development Districts at The Villages.  The investigation now covers almost $400 million in recreation and other bonds, up from $64 million in the original audit. See the Bond Buyer Story for more.

Original Story: The Villages, the giant active adult community south of Ocala, FL, has received a proposed settlement from the IRS to resolve an investigation of tax-free bonds issued by 2 of its Community Development Districts (CDDs). The Bond Buyer reports that the settlement would mean that the Village Center and Sumter Landing Districts would redeem over $355 million bonds issued in 2003, pay the federal government $2.85 million, and refrain from issuing more tax-exempt bonds. The IRS suggested that if the Districts did not agree to this settlement the Agency might expand its investigation to 7 other bond offerings. Neither the CCDs nor the IRS commented in the article about the IRS proposal.

The Villages is one of 580 Community Development Districts in Florida. These Districts are permitted by Florida law to let homeowners associations issue tax free municipal bonds as a way to finance infrastructure. Topretirements readers may recall in our recent story about The Villages that its complicated ownership structure was a focus of Andrew Blechman in his book about the community, “Leisureville”.  It appears that concern is now playing out with the IRS.

One of the IRS’s main contentions is that The Villages’ Development Districts are too tightly controlled by the developer. Florida law requires that, after an initial period, their boards must be controlled by members of the community.  Another contention is that the CDDs overpayed for the facilities (golf courses, parks, and other facilities) that the bonds were issued to finance.

The story about the Villages’ bond issue originally broke in the Orlando Sentinel. The Sentinel published a follow-up that explores what the impact of the proposed settlement could be on residents in the Active Adult Community. Since they are the ones paying the debt service and principal, it might logically assumed that resident fees (and possibly taxes) will be going up to pay for a higher bonding cost (tax-free bonds usually have lower interest charges), not to mention any penalties to the IRS.  Or, since it appears that it was the developer who profited from its sales of assets to the CDDs, maybe they should pay. Since this is early days in the case, only time will tell. But residents are probably concerned, and many of them angry.

For Further Reference:
The Villages

Facts, Fiction, and the Fast Life at The Villages, FL

In 2006 Central Florida was shocked and titillated to read this headline in the Orlando News: “STDs Running Rampant in Retirement Community“. The community in question being The Villages, the sprawling active adult enclave spanning several towns and home to over 60,000 people. Dr. Colleen McQuade, a gynecologist, was quoted that she “treats more cases of herpes and the human papilloma virus in the retirement community than she did in the city of Miami.” The patients, as old as 80, are “very shocked (to hear the diagnosis)”. Viagra, no risk of pregnancy, and lack of sex education were viewed as the culprits.

That bit of press was a source of merriment to talk show hosts around the country. On the other hand, it is probably a minor activity in a community obsessed with golf and non-stop activities of all types.  Indeed, if you lurk on “Talk of the Villages“, a popular Forum for residents of The Villages, you will find that life there is more typical than sensational. Topretirements has just reviewed 2 books that discuss The Villages.  In “Leisureville”, Andrew Blechman follows his 55+ neighbors to the active adult community. It is a fascinating read but tends to show life there through a (much younger) prism than his former neighbor’s. Here’s how our Topretirements Guide OldNaussau described the book: “Repeatedly, the retirees with whom he speaks, or who speak to him, quite clearly contradict him. He tries to present the Villages, and several other retirement communities, as sterile, lock-step, isolated, vacuous – like the towns in the movie “Pleasantville” or the novel “Fahrenheit 451″ - but the Villagers praise the activities, security, economy, and socializing around them.”

Ryan Erisman’s “Complete Guide to The Villages Florida” is a much more straightforward and factual guide to the ins and outs of buying and living at TV, as insiders call it.  Check out the entire article in our Tips & Picks section, The Villages - Facts and Opinions

Do you Know The Villages? If so, report on what you think, either in the Comments section below, or in the TR Forum - Is Leisureville on or off the Mark

For Further Reference
The Villages CDDs get Proposed Tax-Free Bond Settlement from IRS

Best 50+ Communities Awarded at Building for Boomers

Philadelphia - For builders, winning an award at the National Association of Homebuilders (NAHB) Best of 50+ Housing conference is really good PR. For baby boomers, looking at the winners provides insight into what the housing industry thinks are the trendsetting ideas in home building. If you are looking to purchase in an active adult community, you should check out this list of communities winning awards to make sure you make the best decision. The awards were given out at the April 2009 Building for Boomers and Beyond Symposium to honor excellence and innovation in the design, development and marketing of housing for older consumers.
There were 80 gold and silver winners in a wide range of categories. Many of the award winners were true to the trends noted elsewhere at this conference:

- Slightly smaller homes and community spaces. No one wants to be conspicuously consuming right now.

- More flexible spaces. You might want 2 dining areas, someone else might want 3. You might need 2 home offices,  another baby boomer needs extra guestrooms instead. The savvy builders of tomorrow’s active adult communities are providing flexible designs that let everybody get the spaces they need.

- Greener designs. Rarely will you ever see LEEDs certification in an active adult community, but you will find developers paying more attention to siting, materials, windows and insulation, HVAC, and other low-cost, high return ideas that produce a more environmentally friendly development.

- Smarter amenities. Builders are trying very hard to find the right kind of amenities that will attract buyers. The mix is changing in subtle but significant ways.

Here is a sampling of some of the winners in this year’s competition (Note: Many of the awards went to retirement communities or CCRCs. For this article Topretirements is only reporting on those within our editorial focus - active adult 55+ communities).

Best Active Adult Community (up to 500 homes)
Parkview Court -  Torrance, California. This new development has homes ranging in size from 700 to 1400 sq.ft. Luxury touches include stone in baths and kitchens, balconies, large exterior courtyard. Fitness center/recreation room.  Available from $275,000.

Brookhaven of East Cobb - Kennesaw, Ga.  This silver winner features 2 and 3 bedroom, flexible floorplans. Front porches, oversized masters, and vaulted ceilings.

Best Active Adult Community (over 500 homes)
Sun City Festival-  Buckeye, Arizona  by Pulte Homes Corporation.

Del Webb at Lake Oconee -Greensboro, Georgia by Pulte Homes Corporation. This community of 2 and 3 bedroom homes is south of Athens in the great recreation area near Lake Oconee and the Oconee National Forest.

Best Clubhouse in an Active Adult Community

Heritage at Todd Creek - Thornton (Denver), Colorado. This clubhouse overlooks the Rockies and a sensational 18 hole golf course. Each wing of the clubhouse, branching from the main lobby, has a different activity.

Best Detached Home at an Active Adult Community (up to 2,000 square feet)

Eskaton National Demonstration Home - Roseville, California. The Eskaton Home is a ground breaking project that everyone interested in the future of housing for our older population should be studying.  It is Green-Built certified and has smart technologies, , universal design, and social connectivity in mind.

Best Attached Home at an Active Adult Community (over 2,000 square feet)
Chester River Landing- Chestertown, Maryland. This is a very cool place. It has 49 homes (single family, townhomes, condos) on the Chester River. Almost all homes come with a private boat slip.

What do you think? Give us your ideas for the best active adult communities using the Comments feature below:

For further reference:

The Full List of Winners at the NAHB

Why Not Live in an Award Winning Community

Choosing the Best Retirement Communities

Boomers in the City - the Urban Lifestyle Beckons

The urban retirement lifestyle represents a perfect fit with what many baby boomers are looking for in a retirement lifestyle. Baby boomers want to be close to employment possibilities, they would like to reduce their dependence on the automobile, and they are very interested in participating in a rich and diverse community. Builders of 55+ communities have been listening, and many new choices are attracting buyers.

Granted, the urban lifestyle doesn’t appeal to everyone. Most people, 85% of them, will not move anywhere in retirement. But about 15% of retirees will relocate; either locally (10%), or at some distance (5%).  Of the 15% who will relocate, presumably mostly of whom are from the suburbs, a small but significant percentage will retire to a city.  Those who choose an urban retirement tend to affluent.  Many will purchase a pied a terre for occasional use in the city, but other baby boomers will sever all local ties and move to a city.

Living in the city is seductive for many folks.  You can live in a sleek apartment in a hot neighborhood. Walk downstairs (or take the elevator) and a world of great restaurants, galleries, museums, parks, and every other kind of attraction awaits you. You can live in an exciting environment with diverse neighbors, not just the folks whose idea of a stimulating discussion is that incredible putt they made on 18. Not to mention great shopping and maintenance-free living. And if you decide to go on vacation, you just lock and leave.

At the recent National Association of Homebuilders “Building For Boomers & Beyond” Conference in Philadelphia, a quartet of architects and designers discussed the latest urban lifestyle trends.  Speakers at this session included: Bill Kreager of MITHUN (Seattle), Rick New of DTJ Design (Boulder), Doris Pearlman of Possibilities for Design, and John Westrum of Westrum Development (Fort Washington, Pa)  A highlight of the session was their review of award-winning urban developments in Seattle, Boulder, and Philadelphia - cities whose downtowns have been very successful in attracting baby boomers.  The projects ranged from modest density town homes to very high density condo towers. The buildings tend to attract non-traditional people looking for an exciting lifestyle. Buyers represent a wide variety of ages and include both couples and singles. Some of the projects were new construction, while others were conversions from previous uses.  Roof decks, gyms, pools, and other amenities are usually part of the development. Almost all were sold out soon after completion, indicating how much interest there is in this type of urban retirement.

Seattle:

Magnolia Townhouses - 28 units per acre

Ravenna Cottages - 6 cottages and 3 carriage homes - 32 units per acre

Mosler Lofts -This community has won numerous awards. It is a high rise over stores in a thriving neighborhood

Boulder:

One Boulder Plaza - A mixed use redevelopment project overlooking popular Pearl Street totaling 390,000 sq. ft. Apartments are above restaurants and retail. The developers sold 28 of the units in an afternoon (although that was a few years ago). Prices range from $380,000 to $1 million plus.

Philadelphia:

Parc Rittenhouse - A former Sheraton Hotel that towers over very popular Rittenhouse Square.  Apartments range from 400 to over 7500 sq. ft.

Liberty Tower - A former commercial building near Logan Square that is loaded with amenities.  Apartment sizes go from 1150 to 15,000 sq. ft.

10 Rittenhouse - New construction on Rittenhouse Square. Features a beautiful indoor pool along with every other amenity. As with many other of these Philadelphia high rises, owners are a mixed group including pro athletes, middle aged professionals, as well as baby boomer retirees.

Symphony House- New construction near Kimmell Center.

Domus- 290 luxury apartments in the University Center that integrates residential, commercial, and public recreation areas.

See Also:   Best Retirement Cities

Is a city retirement in your future? Please share your viewpoint in the Comments section below.

50+ Home Builders Optimistic

April 29 - Your editor just spent a few days in the City of Brotherly Love attending the National Association of Homebuilders (NAHB) 50+ Builders Show: Building for Beyond. While you might expect that any convention of home builders in this economic climate would be a downer, this conference was anything but. Builders, at least the obviously successful ones who gathered here in Philadelphia, are a resilient and resourceful bunch.  It was obvious from their questions and comments why these builders have been so successful:  they want to build the homes and communities that satisfy the changing needs of their buyers. Thank heavens!

Here are some of the highlights:

Economic Forecast
David Crowe, NAHB Economist, and Mark Zandi, founder of Moody’s Economy.com, presented their economic analysis and forecasts.  According to both economists, we have reached the bottom of the recession and are starting to dig our way out.  They believe that home prices still have a way to fall (perhaps 10% nationally) and that the inventory of unsold homes still needs to be worked off. When both of those issues are resolved in late 2009 or by mid-2010, the housing industry should begin to return to normal. One of the more optimistic parts of Mark Zandi’s analysis is that although home prices still have a way to fall in some parts of the country (Miami), there are several other areas where home prices have become a bargain relative to long term trends (Fort Myers, FL; Riverside and the Central Valley, CA).

The 55+ Market
Builders are very interested in baby boomers’ future housing plans. A highlight of the meeting was the presentation by the NAHB and Met Life Mature Market Institute’s latest study of the 55+ Housing Market. Currently about 71% of 55+ folks live in mixed generation communities while the rest live in some type of 55+ community (some of which occur naturally, and are not age restricted). About 11% live in pure age-restricted 55+ communities. Buyers of active adult communities are relatively affluent with an average household income of $70,000. Home and community design and living close to family and relatives are the two most important considerations for choosing an active adult communities (see related article - baby boomers reasons for choosing active adult communities).
Mark Stemen, Senior VP of K.Hovnanian Homes talked about trends he sees in 55+ housing. Chiefly those are: 55 buyers are waiting out the recession before they buy, they are thinking about smaller and more efficient homes than they were a few years ago, green communities are in, living close to work and fewer car trips are important considerations, and adaptable and universal (accessible) designs will be an essential component of tomorrow’s homes. Mark predicts that age restricted communities situated within larger developments will become more and more common, since they offer the best of both worlds in terms of diversity and facilities.

Floor Plans
One of the most interesting sessions was the one where architects and designers discussed the latest trends in home floor plans.  Obviously, with the move to smaller homes space planning becomes critical. This session explored trends in each of the major rooms/functions of the modern active adult community home.  The major trends noted are a move toward flexibility, since so many 55+ buyers continue to work or have different family situations. Rooms that can be switched out to become dining, home office, dens, or bedrooms offer owners the flexibility they need. Kitchens, entry ways, light, and outdoor spaces are all areas where builders can improve their products and attract new buyers.  Here’s a hint when looking at the great room of a house - is there a good spot for a TV?  Seems like sometimes designers forget to leave a blank wall spot for the device people spend a lot of time watching!

Urban Developments
This was our favorite session. Four architects and designers discussed trends in urban active adult buildings.  Spectacular projects in Philadelphia, Boulder, and Seattle were discussed in detail - and half of the audience was ready to buy! In the next week we will have a more detailed article on these developments.

Best of the 50+ Housing Awards
The highlight of the show was the presentation of awards for the best communities and projects for the 50+ market. Here is a link to the 50+ design winners - if you live near one of these you should check them out!

Sun City Parent Co to Merge with Centex

In a proposed merger that will create the largest homebuilder in America, Pulte Homes will combine with homebuilder Centex in an all stock deal. Pulte Homes is the parent company of the Anthem and Del Webb brands, the latter which brings you the huge Sun City active adult communities around the U.S.
The combined company, which will have $3.4 billion in cash, will use the Pulte name. Centex tends to specialize in entry level and first and second move up homes, while Pulte is known for its presence in the active adult segment of the market.

One reason given for the merger, other than operating efficiencies, is the attraction of the large landholdings owned by Centex in Texas and the Carolinas. These markets have been less affected by the housing meltdown than many others. The combined company will have operations in 59 markets and 29 states.
The merger appears to make sense in that it creates relatively little redundancy and in fact strengthens both companies.  Our prediction: when the market recovers, look for more Pulte and Del Webb projects in the Sunbelt.