Bowden's Beat

Population Growth Insights = 55+ Rules

The reason we at Bowden's Market Barometer love NewGeography.com:  Insightful and provocative commentary provided by a coterie of highly intelligent, socially sensitive professionals.  The think tank recently posted an interview in Social Intelligence with Neil Howe, noted historian, economist and demographer,  on "the changing nature of human population growth and its implications for politics, culture, and business."  Well worth the read . . . (click here)

Regional Trends

It’s that time of year when pundits publish their “lists,” i.e., the best of this, the worst of that – and then pull out their crystal balls to prognosticate on market growth.  In the Market Barometer's year-end edition, we profiled lists from some of the most viable resources based on a variety of topics including job growth, new home and construction activity, and domestic and foreign investor interest.  Interestingly, there were parallels -- and conflicts.  But one of our most reliable and provocative resources is NewGeography.com.  In their end-of-year rundown of their most popular stories of 2011, Joel Kotkin's July examination of the U.S. regions he believes to be the most primed for future growth -- "The Next Boom Towns in the US" -- made the cut, and is well worth a re-read.  Click here for the article.   

 

Financing Retirement

It is estimated that nearly 70% of Baby Boomers are currently unprepared to maintain their present lifestyle into retirement. A paradox associated with this massive generation is the disparity that exists between what they want and what they can truly afford. This psychographic aspect will clearly have an impact on the way the senior segment will deal with retirement.

 

The leading edge of the Boomer generation won’t face the traditional retirement age of 65 until 2011. That said, it appears that the traditional retirement age has been extended by about four years as the continuation of employment or return to work on the heels of early retirement is becoming increasingly common. And according to a study conducted by active adult community specialists, Pulte/Del Webb, more than 40% of 50-year-olds and 18% of 65-year-olds who are still working do not anticipate ever retiring. While financial stability is a key factor in this decision, boredom, self-satisfaction, and enjoyment were also cited as consequential to the desire to keep working.

 

On the flip side, while senior income has a tendency to recede, net worth typically grows. In this regard, seniors have fared far better than other market segments.  According to the Federal Reserve’s most recent Survey of Consumer Finance (2007), the median net worth of the various senior cohorts far exceeded that of the younger groups: $254,100 for the 55-64 group and $239,400 for the 65-74 group.  While the 75+ age group net worth was somewhat lower at $213,500, it was significantly higher than that reported by the 45 to 54 and 35 to 44 age groups, which were $184,900 and $88,000, respectively.

 

It’s All About the Deal - In deference to recent conditions and events, real estate professionals need to recognize that the “deal” must be flawless.  Strategic trends focus on making the purchase decision as easy as possible and include a fully refundable deposit if the buyer cannot sell their existing home; on-site sales staff to assist in selling and staging the home; and in some cases, the builder/developer will even buy the existing home if it doesn’t sell within a given period of time. Personal attention to the buyer’s individual situation is always good business, but is particularly required when the buyer is “of a certain age.”  It is difficult to pitch a lifestyle or a housing product when the buyer’s mind is focused on leveraging equity or maintaining an established way of life that relies on financial security. Gone are the days when the tour of the 50,000 square foot clubhouse sealed the deal.  Nowadays, that clubhouse may seem more like a ball and chain than a social opportunity.   

For further perspective, visit Bowden’s Market Barometer website.

The Age-Targeted Housing Spectrum

   According to a variety of resources, 80 is now defined as the point at which “old age” sets in, making a case for the continuation of active adult community development that accommodates various and diverse levels of living and associated activities and programming. While most senior households do not currently reside in age-qualified communities that is bound to change as the tsunami of maturation gathers momentum.

 

Based on historical data, 2% of 55+ households resided in age-targeted communities in 2003, expanding to 3% by 2007. The impact of the aging factor on age-targeted housing will be interesting to watch, i.e., when and to what degree that percentage escalates. Approximately 20% of those living in age-qualified environments were under the age of 60 in 2007.  But how many of those are now over the age of 60, and has there been a definitive shift in the 55+ community profile?  Said another way, this is a moving target, and developers must be alert to accommodate change as, and even before, it occurs. 

 

While the growing potential demand for age-targeted housing products is clear, the inherent sub-groups of maturing adults must be addressed as they each have specific, albeit potentially transient, needs, desires, and expectations with regard to the way their homes and their lives should function.  While younger seniors continue to crave kitchen island work areas, separate showers and private commode compartments, older buyers are decidedly more practical and frugal, seeking bathroom and kitchen aids, wider doorways, and nonslip flooring.  These accoutrements are just the tip of the iceberg with regard to design and function.

 

Service needs vary as well.  The younger, theoretically more affluent group may be impressed with concierge and catering services, while the elder group wants outdoor maintenance, and easily accessed home-repair, housekeeping and transportation services.  Both groups have a preference for security, energy management and programmed social activities. With regard to amenities, CarolinaLiving.com reports that walking paths have ranked #1 with buyers in the Carolinas since 1987, beating out, by a wide margin, long-time favorites golf and tennis.

This blog has been excerpted from the Feb/Mar issue of Bowden's Market Barometer, an industry related publication focusing on trends in real estate.  To read the entire article go to http://www.bowdensmarketbarometer.com and click on "inside this edition."