The days of building 7,000-unit Sun Cities that require $100 million in infrastructure and completing a 70,000 square foot amenity center up front—before the sale of the first home—are over. The new world of active adult communities is focused on creating lifestyle in a much smaller setting, with the true magnet being a new home that perfectly fits the daily life of a 55 and better homeowner. Shea Homes has been an industry leader with their Trilogy communities for years, offering a great mix of amenities and programs. And in Florida, GL Homes has established a terrific brand (and efficient marketing machine) with their Valencia communities. But there is a notable trend occurring in a variety of markets with smaller (250 to 400 unit) age-qualified communities that feel more like infill developments.
Four such projects happen to be located in Southern California. Auberge by CalAtlantic Homes in San Diego, and Sendero and Gavilan at Rancho Mission Viejo in Orange County (California) all show significant values above the “equivalent” conventional product that is selling nearby. Based on our recent research, the value per square foot earned by the age-qualified product ranged from 15% to 30% higher than equivalent conventional product in the same competitive market. Note that Auberge has sold 125 homes (approximately 30 per month) since opening in March, 2016. Del Webb just opened La Floresta in Brea last week and, while sales have not officially commenced, the sales office reported that over 1,000 visitors came through the models within the first few days of opening.
The key elements to note about this new flock of age-qualified communities follow:
- Active adult product lines typically outsell nearby conventional product lines (even if the same builder offers both products), and values are higher for the active adult product.
- Size no longer matters. The communities generally range from 250 to 400 units total. If anything, this limited amount of units builds momentum and minimizes market and financial risk.
- “New” does matter. Most of the buyers are moving from homes where they raised a family. Those homes are often 20 to 40 years old, and do not including all of the “bells and whistles” offered with energy efficiency and designer interior options.
- On-site amenities exist, but are not massive. The central facility is usually on an acre of land, and the structure is around 7,000 square feet. In addition, the amenities are typically under construction during the sales process, but are not necessarily finished prior to sales initiating. These communities look and feel like the conventional neighborhoods nearby.
- The communities are typically gated. These buyers value their privacy, and there is a perception that gates = safety.
- The elements above lead to modest HOA dues (typically below $300 per month), and the buyer appreciates this.
- The greater regional community is recognized as an additional amenity. The presence of shopping, a job base, services, and families (for the “baby chasers” who want to be near their kids and grandkids) is a major draw.
This trend is both promising and logical in that the Boomer market segment has the financial wherewithal to move, and, in the above cases, has found a compelling reason to do so.
Contact us to discuss how we can help you strategize for a move into the age-qualified marketplace.