Off their rockers: Construction of active-adult communities outpaces single-family housing

Baby boomers are driving an increase in the construction of active-adult communities, which offer smaller homes, little maintenance, and a host of clubs and activities. Photo courtesy PulteGroup Inc.

Developers are tapping into the 76 million-strong baby boomer market, with active-adult construction taking off over the last couple of years.

Sparked by pent-up demand, a mini-revolution in senior housing is occurring as a generation of nonconformists seeks a lifestyle outside the realm of grey heads nodding off to the “Price is Right” theme song.

With no plans on retiring soon, those born during the advent of The Marshall Plan, McCarthyism and the Warren Report are opting for a dynamic modus vivendi that redefines moth-eaten notions about the golden years.

The upward trend in 55-plus single-family housing starts is apparent, says Paul Emrath, vice president of survey and housing policy research at the National Association of Home Builders. Preliminary estimates indicate there were 27,000 such groundbreakings nationally last year, up nearly 50 percent from 18,000 in 2013. In comparison, starts for all types of single-family housing rose 3.7 percent in the same period.

Age-restricted single-family starts remained level at 13,000 per year between 2010 and 2012, according to construction data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

Meanwhile, after doubling to 16,000 between 2009 and 2010, the number of age-restricted multifamily starts increased to 18,000 in 2011. That figure fell to 17,000 the following year before rising to 23,000 in 2013.

PulteGroup Inc. jumped on the bandwagon locally in 2006, when it began developing the 1,500-acre Sun City Carolina Lakes in Fort Mill. The mega-community has just under 3,000 rooftops, and plans to finish out this year with another 400. Amy Tuck, marketing manager for PulteGroup, says baby boomers make up the largest percentage of residents. The development sells, on average, one home per day.

“We’ve seen great success with Sun City Carolina Lakes, so opening another active-adult community in the area is always a viable option,” she said.

Emrath cites several reasons for the increased real estate focus on boomers, defined as those born between 1946, after the GI Bill lowered mortgage rates for returning World War II soldiers and sparked a flight to the suburbs, through 1964, when the exploding birth rate finally tapered off.

This year, the oldest boomers hit 69 years old, while the youngest turn 51.

“Most people who buy into 55-plus developments are financed by selling their existing home,” Emrath said. Credit has eased up a bit, he said, freeing up funds for younger homebuyers. “The 55-plus homeowners are now more able to sell their existing home at a reasonable price.”

Meanwhile, the older population has a good track record on maintaining property. The homeownership rate for Americans aged 65 and over has remained steady at roughly 80 percent since 1999, the Census Bureau says. The average overall homeownership rate was at a 20-year low of 64.5 percent last year.

In addition, Emrath says, the boomer age bracket continues to grow significantly in both population and share of households, creating more demand as life expectancy increases.

That assessment is born out in demographics. Baby boomers numbered 76.4 million in 2012, accounting for about one-quarter of the population, according to the Census Bureau. The generation will swell the number of individuals aged 65 and older to 19 percent of the population in 2030, from 13 percent in 2010.

The majority will remain relatively young – between 65 and 74 years old – until around 2034, when all boomers will be older than 70. What pressing societal needs will occur after that is anyone’s guess. By 2050, 21 percent of the older population will be 85 and beyond, up from 14 percent in 2010.

Meanwhile, anticipated demand for new housing for those aged 55 to 74 has grown 31 percent to 230,000 new homes in 2016, from 175,000 in 2014, according to Atlanta-based real estate company Robert Charles Lesser & Co.

Demand is forecast to reach 248,000 by 2020 and to top out at 252,000 per year between 2025 and 2030, the year the youngest boomers reach senior-citizen status. That’s more than a decade in which about 20 percent of all new homes will be built for or bought by people 55 and older, the NAHB says.

Emrath offers another reason new starts for older individuals continue to rise: money. The median net worth of individuals 55 to 64 years old was $143,964 in 2011, according to the census bureau. For those younger than 35, it was $6,676. “On average, it’s an age bracket that has wealth,” he said. “Developers have to respond to market forces.”

It appears they are. Fourth-quarter results of the National Association of Homebuilders’ 55+ Housing Market Index show that builders are quite positive about the market. All segments – single-family, condominiums and multifamily rental – registered increases over the fourth quarter of 2013. The index, which measures builders’ sentiment on items such as current sales, prospective buyer traffic and anticipated six-month sales, gave single-family homes a score of 54, the highest fourth-quarter score since the inception of the index in 2008 and the 13th consecutive quarter of year-over-year improvements. A score below 50 shows more builders view conditions as poor than good.

There’s an added incentive for building age-restricted housing, Emrath says. Developers can seek to waive impact fees to offset the cost of new school construction, as it’s legal for 55-plus communities to prohibit children from living there. Such sites are exempt from the familial provision of the Fair Housing Act as long as at least 80 percent of the occupied units have one person who is 55 years of age or older. In addition, an amendment to the act in 1995 eliminated the requirement that 55-plus developments have “significant facilities and services” designed for the elderly. It also granted a “good faith reliance” immunity from damages for people who in good faith believe that the 55 and older exemption applies to a particular property, if they do not realize the property is ineligible for the exemption and if the property has a formal written statement that it qualifies for the exemption.

Aside from living in a quiet area, boomers find these “age-qualified” and “active adult” living arrangements attractive for their amenities and low maintenance, Emrath said.

Take, for example, Sun City Carolina Lakes. It has more than 135 social clubs, a 40,000-square-foot clubhouse, indoor and outdoor pools, an 18-hole golf course, a fitness center, trails, a community garden and dog park, a café, tennis courts, a computer lab and library, an arts and crafts studio and a ballroom. It will have 3,400 homes when built out. Prices range from the $100,000s to the low $500,000s.

“The opportunity to meet new friends and be a part or classes, clubs, volunteer groups, lifelong learning and more with people with similar interests” is the reason people move to such developments, says Jacque Petroulakis, a spokeswoman for Sun City builder Del Webb Corp., a division of PulteGroup. Tuck says Sun City Carolina Lakes’ proximity to Charlotte and its conveniences, as well as the South Carolina climate, lure potential residents. Many homebuyers move to

Homes in the Fort Mill, South Carolina, active-adult community Sun City Carolina Lakes are selling at a pace of about one a day and number nearly 3,000 since construction began in 2006. Photo courtesy PulteGroup Inc.

Sun City because their families live nearby. The development has a “grandparent” park and designated hours for grandchildren to swim with their grandparents.

Customers are typically seasoned homebuyers who have owned more than one house in their lifetime. They are looking for innovative home designs with the latest in energy efficiency and modern conveniences, she said. Del Webb, which owns 50 actively-selling complexes in 21 markets, is introducing smaller-sized communities that are closer to city centers, retail and open spaces.

Pam Simms, activities coordinator for The Villages at Oak Tree in Mooresville, says the 173 attached and detached homes at the site are sold out, requiring interested parties to go through a Realtor for a resale. She says younger couples have been moving in recently, compared with an influx of widows several years back.

“Everything is taken care of for you,” she said. “You just come in and live.” A maintenance fee of roughly $240 per month covers all activities; use of the club house; water, sewer and trash; and lawn care and exterior upkeep of the residences.

“You’re around your peers,” she said. “You can enjoy your life and not have to mess with the yard.”

The Charlotte-area has ten 55-plus developments and another 12 that are not age restricted but “appeal to active adults,” according to Samantha Dahlstrom, executive assistant at website 55Places.com. “It’s like college for those 55 and older,” she said. These types of complexes differ from retirement communities in that they don’t provide assistance with daily activities such as meals, personal care or medication.

Retirement developments usually offer continuing-care options and on-site nursing in rental units. They are generally “geared for a different stage of life,” she said.

Locally, Epcon Communities is slated to launch construction on a 94-lot active-adult subdivision, the Courtyards at Kinnamon, by early fall. The 30-acre site sits along the east side of Kinnamon Drive and is just west of the Huntersville Business Park.

The project will be constructed in three phases, each consisting of 31 or 32 homes, and the entire subdivision will be completed over the next three to four years. Homes will range from 1,500 to 3,000 square feet with an average price of $375,000, and will feature stone façades and wood exteriors, landscaping, granite countertops and hardwood flooring. In addition to the clubhouse, the Courtyards at Kinnamon’s residents will have access to a lap pool, a fitness center, a community garden, “parkettes,” and bocce and pickleball courts.

And Shea Homes is developing a new active-lifestyle community in the Lake Norman area of Lincoln County. As part of its Trilogy brand of high-end, resort-lifestyle communities geared toward aging baby boomers, Shea is developing the Trilogy Lake Norman project just off of N.C. Highway 73 near Denver, N.C. The property was formerly known as “Carolina Ridge.”

The first of Shea’s active-adult communities in the Carolinas, the development will have 1,650 homes when it is completed. A gallery of model homes is expected to be available by late summer 2015.

Another difference between active-adult developments and retirement villages is that “a large portion of the active-adult communities still work,” Dahlstrom said, whether it means a job they’ve had for many years, a new opportunity to work from home, or a start-up.

That’s not likely to stop any time soon, according to the “MetLife Report on Early Boomers,” published in late 2010 by MetLife’s Mature Market Institute.

Several socioeconomic factors come into play.

One reason is boomers’ high education levels. Between 2000 and 2010, the percentage of U.S. men and women aged 60 to 64 with a college or graduate degree jumped more than 10 percentage points to 37 percent and 30 percent, respectively. For women, the numbers recognized the long-term trend of rising enrollment in secondary education, the report says.

But for men, it was a singular achievement, not even one-third of younger groups achieved college degrees. College-related draft deferments during the Vietnam War may have sparked the 2010 findings of unusually high graduation rate among men between 60 and 64.

A March 2010 Census Bureau survey found that almost half of male and one-third of female college graduates aged 65 to 74 were in the paid labor force, compared with 30 percent of male and 22 percent of female nongraduates. Those that went to college were also more likely to work full time, the report said.

Early female boomers are likely to work longer after the age of 65 because, in addition to living longer, in most cases their lifetime earnings were significantly less than those of men, resulting in a lower Social Security check. Men are more likely to continue working after the age of 65 because they want to remain productive and engaged, the report says.

In addition, the dearth of pensions, low interest rates that diminish returns from savings, as well as the increase to age 67 before eligibility for full Social Security benefits kicks in, is keeping boomers in the workforce.  The severe recession, which increased pressure to support adult children and grandchildren, and the housing meltdown that severely cut into equity are other factors.

But Betty Rondinelli doesn’t have to worry about any of that. The Staten Island transplant says she’s been happy living at The Villages at Oak Tree since 2000. Rondinelli described her typical day as “very, very active” with opportunities for Red Hat Society socials, mahjong and line dancing.

“I don’t hear anybody complaining,” said the 94-year-old, adding that she likes that the “younger people hang out.”