Builders Showcase: Baby boomers fuel sales in 50+ housing
BY PAUL KELMA Sun-Times Media
Not all homes are created equal, and not all segments in the housing market are in the doldrums.
The segment satisfying buyers in the age-50+ market is doing pretty well, actually.
In fact, the National Association of Homebuilders is accepting nominations for its “Best of 50+ Housing Awards” program, with winners to be named in January, 2013. Awards will cover 44 categories in that market segment alone, including “best aging-in place,” “best mixed-use,” and “best fitness and wellness program.”
“The demand for 50+ housing will continue to grow as the baby boomer generation — the largest growing group of buyers we have ever seen in this age group — approaches retirement,” said W. Don Whyte, NAHB chairman of the 50+ Housing Council.
It’s already happening, backed by sheer numbers in the 50+ age group.
Builders in the Chicago region and northwest Indiana report sales at stronger levels in this market than housing in general, offering floor plans and communities that appeal to baby boomers either retired or empty-nesting but still working.
“Downsizing” and “low-” or “no-maintenance” are the basic buzzwords for buyers, but they also don’t want to give up the goodies of a comfortable home in a neighborhood that’s quiet and convenient, sometimes offering a clubhouse, other amenities and even a little extra space to host the kids and grandkids.
“We’re a builder that caters to people who are done with or not planning to raise a family. They have their social appetite satisfied elsewhere, their country club elsewhere, their group of friends,” said Jeri Szatko, director of sales and marketing for Merit Homes. “They’re looking for a home they can manage, not that manages them.”
Merit is the developer of The Reserve at Merit Club in Libertyville, a 128-home community that includes 26 one-acre custom and 102 ranch and two-story homesites. In The Enclave, the final phase of the latter, just 10 of 17 sites are left.
The Merit buyers have been empty-nesters in the 55+ age group. They are financially stable, and — unless they need one-level for medical reasons — “don’t have to do anything,” said Szatko.
“They can take time to look around. When they do find something they like, they are in a position to move. They’re not under any pressure,” Szatko said. “And they want a certain level of quality, style and class.”
At Prairie Park in Wheeling, quality, style and class are what most buyers want. Developer Smith Construction has found a niche in giving it to them with fully customized condominiums. In two months Smith sold six homes, with five involving a high level of custom redesign.
“We want our buyers to be happy, so that’s the biggest in marketing for us,” said James Smith, vice president of marketing for the company and the (eventually) 305-unit community.
Prairie Park’s buyers were able to sell their homes even in a generally down market because “they were reasonable on the prices,” Smith said. “The interest rates are low. When are we again going to see interest rates in the 3’s?”
He said the buyers in his company’s niche — luxury, custom, low-maintenance, and able to sell their homes — are able to afford their needs and wants. But like other segments of housing, not all 50+ buyers are created equal.
Some want and need to move but cannot sell their homes.
Enter builders like Epcon Communities, which has two communities in Valparaiso, Ind., and one each in Woodstock and Plainfield. They offer attached and detached single-family homes in the $180,000 to $235,000 base-price range, with some customization available.
Epcon also touts a Home Equity Conversion Mortgage, or HECM, a financial option for buyers age 62 and older if they do not want the burden of a monthly mortgage payment, or if they have a home they cannot sell, but want to purchase a new home offering a stair-free, maintenance-free lifestyle.
When the homeowner moves or passes away, the home is sold and the HECM loan balance is paid off from the sale, just like a traditional mortgage. The buyers keep their old home on the market until it sells; some choose to rent it out. A unique attribute of the program is that if the balance of the HECM mortgage is greater than the value of the home, the homeowner or the homeowner’s heirs are not responsible for this difference.
“The biggest reason that people don’t move is they can’t sell their (existing) homes,” so HECM offers them an option they can at least talk over with a sales associate and see if it will work for them, said Ember Ferrantino, Epcon marketing coordinator.
Epcon assessed the larger 50+ market and decided there was room for both that option and single-family living in communities that mix homeowners of all ages but “targets” those who want the 50+ maintenance-free lifestyle.
“It feels like any other community, but they are living with people of similar ages and backgrounds. They don’t have to feel like they are living in a ‘retirement home’ and they are not restricted in what they can do. Many are looking to downsize,” Ferrantino said.
At the Maples at the Sonatas in Woodstock, construction is already in the second phase. At Villas at Fox Run in Plainfield, 11 of 19 properties have sold in a phase that will not be finished until December. At Courtyards of Pepper Creek in Valparaiso, a “sister community” to nearby Villas at Vale Park, “we’re selling the models before we can even furnish them,” Ferrantino said.
Epcon’s sales indicate the 50+ market “has actually gotten stronger,” she said.