May 27, 2011 — Millions of baby boomers, the oldest of whom turn 65 this year, have had their retirement plans turned upside down. They are waiting longer to retire, don’t have as much money to live on as they thought, and are turning to different living options. This turmoil has had a profound effect on active adult communities, whose target audience are these baby boomers. To help you understand the top 2011 trends in active adult communities we asked Topretirements advertisers and members to answer several questions about this market. Their responses were amazingly insightful – we hope you agree!
Questions we asked
These were the questions we posed to our advertisers and members:
1. Home sizes and prices. The National Association of Home Builders (NAHB) reported recently that active adults are buying… smaller homes these days than they were a few years ago. What is the average size of the homes your co. is selling today? Is that up, down, or the same as the recent past? Is your average home selling for more, less, or the same?
2. Home features. What are the main drivers when it comes to features inside the home?
3. Green or universal design. Are prospects interested in these? Interested enough to pay extra?
4. Amenities. What is the single biggest amenity that your buyers are interested in?
5. Trends. What do you think will be the biggest trends in your market in the next few years? Do you think the market has turned the corner?
We’ve provided an overview of what we learned in this section, followed by detailed comments from our interviewees. As a baby boomer considering a purchase in an active adult community, these are all important factors for you to consider:
1. Prices and sizes. The consensus is that baby boomers are definitely looking for smaller homes than they were a few years ago. Prices are generally down in most developments, particularly in the resale market, where they are often below replacement cost. Home prices for some homes are higher because of upgrades.
2. Features. There are some decided changes in desired home features. Great rooms, open floor plans, and granite countertops are really in. Luxury touches in kitchens very popular, as are technology features and home offices. Dining rooms and McMansions are out, quality is in. Single floor living is very desirable.
3. Energy and green. More and more active communities are offering energy saving and green options. While many buyers will not pay extra for these options, a minority will. Energy saving options are more popular, particularly when it is easy to see the payoff. Universal design ideas like single floor living resonate with consumers.
4. Amenities. Almost everyone we interviewed mentioned that golf courses aren’t the draw that they were a few years ago. Instead, walking and bike paths are hot. So are clubs, fitness centers, access to boating or a lake.
5. Trends. Quality and value are important, as is location – people don’t want to be in the sticks. Master suites and kitchens need to be nice. Today’s baby boomers are very sophisticated, they want to know about the Home Owners Association and be confident about the future well-being of the community.
Detailed Responses by Question
We thought the answers we got from our advertisers were so interesting we have reprinted most of them in this section, by question. Their candid responses are greatly appreciated!
Q: 1: Size and price
Jeff Hollansworth – RE/MAX of Hot Springs Village: In Hot Springs Village, homes are selling at about the same pace as last year (2010) through the first quarter. The average home being sold, however, has lowered from $193,000 last year to $176,000 this year. Clearly the higher end homes are taking longer to sell. There are some real bargains now on the resale market. It would be easy to find homes selling well beneath the build cost.
Ray Finocchio, Jensen Communities: The average home size in our communities is 1100-1300 sq feet. It is about the same as the past. Prices are down about 20%.
Hampton Lake (Bluffton, SC) – 2010 was a tremendous success with 119 sales, and we are already enjoying exceptional activity and sales within the community this year.
Gail Bromiley, Weichert Realtor in Hilton Head: The trend in home buying especially with retired buyers is to go smaller. The typical retired buyer in the Hilton Head/Bluffton area wants smaller (1600 – 2200 sf.) with minimal maintenance. The average home is selling for less. Homes in my area have never been more affordable. According to the Hilton Head Area Association of Realtors, year to date (Jan through Mar. 2011) compared to the same time period in 2010, the affordability index has increased by 12.6%. The average sales price has decreased 12%. YTD, the number of closed transactions have increased by 8.1% and the number of pending sales has increased by 30.3%. It appears “affordability” is the key influence on the increased sales and pending sales. Home inventory in March, 2011 has declined by 18.2% compared to March, 2010. Overall, I am cautiously optimistic.
Laura Morgan, Fearrington Village: Average size new home: 2279 sq ft in 2010 (2009 was 2435 sq ft). And while the average size did go down, the new home price actually increased (people building less square footage but opting for nicer appointments).
Jacque Petroulakis, Pulte Group: At several of our Del Webb communities across the nation, we have introduced smaller home plans to compliment other existing home plans. We are finding that with more single buyers and more people watching their pocketbooks, smaller home options are popular for many people planning their next stage in life.
Luke Noe – Rarity Bay. Based on the stats from our current inquires for 2010 and 2011 the prospective baby boomer buyer is looking for a home in the price range of 200-450k. The majority are looking for 1800-2600 heated sq/ft. They won’t sacrifice quality! The mindset has definitely changed in the boomer buyer. They want a home that simply fits their needs verses building the 1 million dollar home that exceeds their needs. In the Smoky Mountain region we’ve seen the prices hit the bottom and now threatening a small uptick which is bringing a lot of buyers off the fence. If customers are looking to move now, then they can find great deals on re-sale homes that are less expensive than building new. We’re still seeing a big demand in great deals on homesites where the boomer can build their own dream home and good value because the land is heavily discounted. This has also opened up the condo market at Rarity Bay with prices ranging from 170k to 299k.
Q 2 – Home Features
Rarity: Floor Plan Flow- Open Plans with views orientated out the rear towards the lake, golf course or mountains. High or Vaulted Ceilings on main with large windows on back. Most boomers want the homes to be main level living. Additional bedrooms and great room downstairs. Kitchen- Granite, Stainless, tile, ovens, cabinetry. Hardwoods throughout main level on homes except kitchens and bathrooms. Nice Crowns and Base TRIM throughout the main. Master bed rooms and bath rooms. Tray Ceilings, built in TVs, fireplace. Bathroom- heated floors, double vanity, his and her closets, shower and tub. Dining rooms a thing of the past.
Hot Springs Village. Hot Springs Village residents are very active despite the fact that two thirds consider themselves retired. When considering a home, residents want very low maintenance yards – mostly rock and green accents. Inside, they prefer one level, with a very open floor plan. Most popular are smaller homes with more wide open floor plans. No reason to have formal living and dinning rooms anymore. Lake and golf homes are popular particularly with good views and outdoor entertainment areas.
Fearrington: I think quality vs. quantity in everything – wood cabinets vs. laminate, granite vs. corian, hardwood vs. carpet etc…) People also seem to be interested in built-in cabinetry, higher tech home computer/office spaces and as always, well appointed functional kitchens that are also magazine worthy!
Jensen: Floor plan, energy star products and energy efficient homes.
Q 3 – GREEN Information/future trends:
Pulte Group: One of the key trends that you will continue to see in homebuilding is continued focus on energy-efficiency. Sun City Festival in Buckeye and Sun City Anthem at Merrill Ranch in Florence will offer solar as standard to homebuyers. The new program includes a 1.8 kW solar system that supplements the energy needs of the home and feeds back into the grid when producing more energy than the home consumes, saving homeowners money on their electrical utility bills.
Hot Springs Village: The green concept has not taken off in full force in Hot Springs Village. People are interested in saving energy but are not willing to make the investment.
Gail Bromiley: Going green is not a major influence other than its impact on energy efficiency resulting in reduced energy bills.
Fearrington Village: Regarding building green, our customers are definitely eco-minded but they want proven and cost-effective green technologies/products. That’s why over 80 percent of them opt to upgrade to Energy Star certification on their home. But they’re not interested in being “early adapters”, trying out new or expensive technologies.
Rarity: In the smaller homes where people are trying to keep costs down, we’re not seeing a lot of green features. We do see these smaller homes using a good insulated window, very efficient heat and air units also dual fuel. Foam insulation are common in these homes to seal. Fluorescent can lighting is becoming common. The bigger homes we’re seeing a lot of geothermal usage since there is a 30% credit from the GVT. Also features like radiant barrier roofing, foam insulation, fluorescent or LED lighting. The return on the Geothermal on the 5000+ sq ft homes can pay for itself quickly according to recent clients that have installed the units.
Jensen Communities: Yes. No step entries, easy access, universal design great selling benefits. Features that can add value not necessarily pay more are popular.
Q 4 What about amenities?
Gail Bromiley: In some golf communities golf is no longer the major draw, and now focuses on other outdoor activities especially those related to enjoying nature fishing, bicycling, nature trails.
Jensen Communities: One floor living, walking trails, recreation center.
Hot Springs Village: Golf and lakes were the original draw to Hot Springs Village. Recent surveys of our 15,000 residents show that nature trails and a world-class fitness center are equally as important today. This reflects a change in preference for our residents.
Rarity: Location- Boomers want to be in close proximity to a very cultured town that has good grocery stores, dining, shopping, etc. Moving to the culture desert has come a thing of the past. Location is so important. Clubs and Organizations-People are wanting very active communities that have lots of organizations that they feel they’re going to stay busy and find people that share the same interests. Another big amenity is fitness and wellness. The average boomer is interested in the ability to maintain their healthy lifestyle. The ability to have access to walking and hiking trails carries a lot of merit. More important areas that boomers like are the lake access to enjoy boating and fishing. Very close tie with the lake would be the usage of the clubhouse, golf and tennis.
Q 5: What trends are you seeing and/or predicting:
Gail: Open floor plans are definitely the rage and, as always, kitchens and the master suite are very important to buyers. In the Hilton Head area due to the mild climate screened porches for dining and relaxing are definitely in.
Hot Springs Village: In the future, safety and security are going to be at the top of the list.
Jensen: Show value and demonstrate energy and easy access home benefits.
Fearrington: Great room (kitchen open to living) and outdoor living spaces (patio/courtyards or screen porches) The ability to bring the outdoors in.
Rarity: A lot of boomers have become very cautious and not risky. If you’re community doesn’t have all the amenities in place or close to being in place, they are running. If you don’t have homes being built and the community is already active, then they are running. They are looking for development stability, not to forget a self sustaining Home Owner’s Associations. With the internet, the boomer is really doing their homework. They are well educated before they ever show up at your community. We’re seeing a big interest in knowing all the dues and fees to live in your community. Most boomers are on a fixed budget and they are looking for low cost of living or to feel they are getting a good return on their fees. Some boomer like the concept, turn the lights out, take out the trash and you’re free!
Fearrington: As for the market in general, I don’t think we have turned the corner quite yet. I think the market for the next few years will continue to be for smaller square footage but higher quality. I also think folks are placing a lot more emphasis on access to walking trails, fitness and community activities.
Responses from our Members
Here were some of the responses to these questions that we received from our members:
Ron: Home sizes will be smaller mainly due to increases in raw materials, not by choice. People will be looking for green houses in this respect, they will want low maintenance and energy efficient homes. The market in general never drifts up, I expect continued deterioration in the housing market with a great disparity between new houses and and after market houses and lower prices.
Jim: We’d like to retire to a community that is affordable, very safe;
well maintained. Don’t need all the bells & whistles i.e., golf course,
extended activities. The home would be a comfortable 5 room ranch. Must
have a large kitchen and lots of closet/storage space. Prefer a mild climate,
but finances will ultimately dictate location. If northeast must be a community that will plow. Also must allow you to have pets w/o any restrictions.
Linda: I feel that a lot of single retirees don’t want to be responsible for a home. They would rather rent a two bedroom townhome or apartment with some amenities like a pool and some activities, but no HOA fees. We don’t want more responsibilities, we want less. I know I would need less than 1000 sq. ft. and a garage or car park
What do you think? Please provide your Comments below.