Five years ago, as the first group of Baby Boomers began to slow down their work pace and contemplate semi-retirement, the National Association of Home Builders thought it wise to start a Seniors Housing Council to understand what this segment of the population really wanted in its next home.
This group of potential customers became so significant that NAHB even held an annual conference dedicated to the niche. Building for Boomers & Beyond: 50+ Housing Symposiumthis year will be held in April in Phoenix. In addition, NAHB has even gone to great lengths to change all mention of the word “senior” to “50+” in all of its promotional material and events. For example, the “Seniors Housing Council” now is the “50+ Housing Council” (nobody wants to be considered old–a national magazine is even running a contest for the best synonym for the word “senior”).
It seems aging Baby Boomers–newly named “abbies” or “AB-Bs”–clearly are the most critical housing category. The recent International Builders Show, which attracted 100,000-plus builders, developers, product suppliers, interior designers, architects and 1,600 exhibits to Orlando, Fla., was absolutely dominated by Baby Boomer themes and targets. Whatever happened to meeting the modest needs of first-time home buyers and older single widows?
Boomers are pushing the primary housing and remodeling markets, including condominiums, and are the jets propelling the incredible quest for second homes. They have the cash to afford the next step and are getting more attention because of it. As a group, they are inheriting $1 trillion a year from parents and grandparents, and they are not shy about investing those dollars into the roof, or roofs, over their head.
How do suppliers respond? With bells and whistles. For example, at the recent show there were stainless steel refrigerators and microwave ovens with digital televisions screens set squarely on the face of the appliance, colorful embossed bedroom doors with individual children’s names “when the kids come back home,” and even a tow-able tailgate unit that features a gas grill, refrigerator, and beer tap pop-up. The “Gator Pak” fits nicely on your trailer hitch so you get transport it to your favorite stadium (the name is a huge hit in tailgate-crazy Florida because of the University of Florida Gators; the Florida-Georgia football game is known as “The World’s Largest Cocktail Party”).
Remodelers continue to chart the Boomers with earnest, even though they will slow their spending when they get older, according to Bill Apgar of the Joint Center for Housing Studies at Harvard University.
“Boomers accounted for half of all remodeling expenditures as late as 2003,” Apgar said. “But the Baby boom is not done. Even in their 50s, Boomers are outspending their predecessors on remodeling.”
Condos have been the big story in multifamily housing in the past year, representing half of the new multifamily units built. Condos are likely to continue to be a major factor in many markets because of Boomer demand–and traffic congestion.
“The suburban commute has become ridiculous,” said Jerry Starkey, president and CEO of WCI Communities, a Florida developer. “A new generation of working people is focused on adding to their quality of life. They want more time for family and social activities. That long commute has caused the deterioration of their quality of life.”
What is deteriorating the affordable home is the cost of land and infrastructure, plus government regulation.
“Many communities are refocusing growth back on the urban center,” Starkey said. “Land is scarce in these locations. High demand drives the price of land through the roof. To be affordable, it forces housing to go vertical. You have a need for 10-, 20- and 30-story high-rises.”
Condo prices have jumped faster than house prices in many markets, to the point that median prices for condos are higher than medians for houses.
Layne Marceau, president of the Northern California division of Shea Homes, said government fees and regulation add about $30,000 to $120,000 per housing unit. Higher prices continue to push workers further away from the urban core in order to find housing they can afford.
“I used to worry about paying for college for my kids,” said Marceau. “Now I worry about housing they can afford. How much farther away from me will they have to live?”
Remember the acronym NIMBY (Not In My Back Yard)? The new label from some frustrated builders is BANANA: Build Absolutely Nothing Anywhere Near Anything.
Tom Kelly’s new book, “Cashing In on a Second Home in Mexico: How to Buy, Sell and Profit from Property South of the Border,” was co-written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on www.Amazon.com or get your signed copy at www.tomkelly.com.
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