Buyers of Age-Targeted Homes are Shopping Again

From: BUILDER 2011
Posted on: February 24, 2011 12:22:00 AM

The improving stock market and a cold winter are driving an increase in active adult traffic.

There was five feet of snow on the ground in late January when retirees Bob and Betty Driesch left their home in Apple Valley Minnesota to look for a new home in Florida.

“We have always thought about living in a warmer place,” explained Bob Driesch. By the third week in February they hadn’t found it yet. But they were enjoying looking, along with about 2,000 other people who showed up on a sunny, 80-degree Saturday for the grand opening tour of 10 new model homes at Del Webb Stone Creek in Ocala, Fla.

Visitors waited in long lines for buses to take them from the overflow parking lots to the sales center and street of model homes, which, at times, was as densely packed with people as Main Street Disney before the parade. Negotiating through the model homes was a claustrophobic’s nightmare.

It seems that the active adult home buyer, or at least shopper, is back.

Driven by an extremely nasty northern winter, recovered stock portfolios, the perception that maybe the housing market has bottomed, and an urge to get on with life changes they postponed during the housing crash, active adult buyers are showing up at age-restricted communities again and some are buying.

Del Webb’s newest community, Sweetgrass outside of Houston, booked 50 orders for homes in its first week, Del Webb’s parent company PulteGroup reported in its quarterly conference call with analysts. And the uptick wasn’t limited to Texas.

“Snowbirds, if you will, are starting to show up again in Arizona, Florida, places like that,” said PulteGroup CEO Richard Dugas. “So we did say that one month does not make a quarter, and we don’t know what the rest of the quarter will bring, but we like what we see so far.”

The return of the age-restricted shopper began in the last 30 to 60 days in the Florida communities, said Scott T. Eckley, general sales manager for Del Webb’s Orlando and Ocala Communities. “Before, they weren’t even coming out at all.”

Riverwood by Del Webb, near Jacksonville, Fla., saw 1,000 lookers in February and the Stone Creek grand model opening netted about 2,000.

“My personal theory is that there are literally millions out there (who have postponed buying a retirement home) in the last three years,” Eckley said.

The phenomenon is not restricted just to Del Webb communities. There is evidence that traffic and sales are picking up in the entire active adult market, said David I. Goldberg, an analyst for UBS Homebuilding. Improvement in the active adult niche market was mentioned by private home builders in a series of recent market calls sponsored by UBS in Florida, Phoenix, and Las Vegas, he said.

“It feels to me like it is coming (back) in what I would call less amenitized active adult communities,” Goldberg said, specifically developments with maybe one golf course rather than two or more, that can charge smaller amenities fees.

The improved stock market, which is making seniors feel better about their wealth, plus pent-up demand among buyers who have been sitting on the sidelines during the past few years and who feel their life clocks ticking are seen as potential drivers for a rebound in the active adult market.

“You only have a certain number of years when you can enjoy that lifestyle,” said Goldberg.

Steve Nordstrom, president of Pringle Homebuilding Group, a small private builder of age-targeted homes in Central Florida, also reports improved traffic, but he’s not convinced the segment is out of the woods yet.

“My opinion is we are going to continue to struggle,” Nordstrom said. “I think everybody in our industry has been proven a fool over and over again by making predictions. We are cautiously optimistic.”

The fact that large builders, such as PulteGroup, Shea, and others, have been increasing their investment in the Central Florida market gives Nordstrom some confidence as well.

“We are seeing some green shoots. We’ve got some optimism,” he said.

While traffic has definitely picked up, the real question as to whether the active adult buyer is back won’t be answered for some time, as older buyers tend to take a long time to make buying decisions.

As for Bob and Betty Driesch, they have confidence that the time to buy is soon.

“I personally think that the market is bottoming or getting close to it,” said Bob Driesch. “I think if you wait more than a year the pricing might start going the other way.”

So the Driesch’s plan to spend the next few weeks doing more home shopping in the Sunshine State, narrowing down their favorites with the plan to buy next fall in time to be in their new home by next winter.

They liked the Del Webb models at Stone Creek as well as the community’s amenities. “The amenities are major for us,” said Betty Driesch. And they put Stone Creek on their short list of places where they might buy.

“Probably out of all the ones we have seen so far, it is the best,” Bob Driesch said.

Teresa Burney is a senior editor for Builder magazine.
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