Sept. 07 (Source: By Chris Sikich, The Indianapolis Star) - When it comes to housing, baby boomers are different from many people in two important ways: they have more equity in their homes, and many are preparing to move.
If housing experts are right, boomers — the 77 million Americans ages 47 to 65 — soon may be a sweet spot in an otherwise sour market for new homes.
But if you’re a Central Indiana boomer looking to downsize, good luck finding the house you want.
Homebuilders — caught in a slump that has slashed U.S. new homes sales in half since 2007 — have been slow to adjust. And the stock of existing homes in Central Indiana is not exactly rich in the type of amenities boomers say they want. A few builders are shifting to the senior market, but there’s not nearly enough construction planned to meet the pent-up demand, said Edsel Charles, a national and local housing researcher.
“Right now,” said Charles, of Tennessee-based MarketGraphics, “I think only about 60 percent (of boomers) will find what they want, and it should be much higher.”
So empty nesters such as Bruce and Nancy Childs, who decided to downsize from a large home on an acre lot on Indianapolis’ Far Northside, had better be ready for a slog. The Childses started with a list of 220 houses — and ended up dismissing all but two before eventually buying in Noblesville’s Lochaven neighborhood.
“It was a madcap search,” said Bruce Childs, 64, “and they didn’t have a lot we were interested in.”
It’s a story that Charles, who has been researching new housing in more than 20 states, including Indiana, says will be told more and more frequently as early as next year.
Ready to downsize
The retirement market, experts say, appears ripe for change.
Having raised families, many baby boomers are ready to turn in the keys to their oversized suburban McMansions. Research suggests boomers are tired of climbing stairs and mowing lawns and will seek ranch-style homes along quieter blocks, with features that make life a little easier on achy backs and knees.
So far, however, boomers haven’t started moving in big numbers.
“They have hesitated because of the recession,” Charles said. “Once the government and the stock market settle down, and the market turns, you will find this bunch that has hesitated will become a pent-up demand.”
Boomers and retirees, he says, will be among the largest share of the market beginning as early as 2012.
If so, it could be a potent market.
It would be hard enough to ignore 1.7 million Hoosier boomers, who make up a quarter of the state’s population, but add in the housing slump, and it would seem impossible.
“These days a lot of people can’t move,” said Indiana University economist Willard Witte, “because they can’t or won’t sell their house at a big loss.”
Unlike the younger families targeted by most builders, however, boomers have been building equity for decades. They have paid down their mortgages over time, putting them in a better position to sell. Witte said boomers may be the first demographic to move when the market picks up. Charles agreed.
“I think we are heading into a huge retirement market,” he said.
Long wish list
What boomers want, however, appears to be in short supply.
Most boomers now favor ranch homes that are about 1,500 to 2,500 square feet, Charles’ research shows, selling for $140,000 to $230,000. Some prefer age-restricted communities, low-maintenance townhomes and Downtown condominiums. The majority, his research shows, say they want single-story houses within neighborhoods that attract a broader mix of people — and are close to where they now live.
And they carry along a pretty specific checklist:
Open spaces to host friends and family, rather than separate dining rooms, living rooms and kitchens.
Features such as vanities and electrical sockets that are a bit higher off the ground than normal.
Storage, especially his and hers master closets, plus structurally reinforced attics.
Backyard living spaces — not swimming pools or outdoor kitchens, but large decks with fireplaces, hot tubs and wet bars.
But try to find those homes in Central Indiana.
After 14 years, Joe and Carol Ski grew tired of all the stairs in their two-story Carmel home and nearly packed up and went to Chicago because of the limited housing options here.
“I’m absolutely shocked there aren’t more homes available with these characteristics,” said Carol Ski, 58. “We wanted an area that was strictly for adults, and we wanted an area that had active adults.”
The resale market can be just as tough.
Jimmy Dulin, a broker with RE/MAX, said boomers will buy existing homes within certain neighborhoods — but not houses that need work. And, just as the builders are learning, he said, don’t bother showing them a ranch surrounded by two-story homes with kids.
“They want a well-kept and well-maintained house,” he said. “They want to be around people like themselves, but not necessarily isolated.”
Cash in, move out
A few area builders have begun gearing up for a boomer market.
Pulte Homes, Ryland Homes, M/I Homes and Shoopman Homes are among builders with offerings tailored to retirees.
After their long search, the Ski family found Britton Falls, Pulte Homes’ Del Webb ranch-home neighborhood in Fishers. Aimed at people 55 and older, the Del Webb neighborhood is the only one of its kind in Central Indiana.
No more mowing lawns, shoveling snow or dodging kids in the streets. And residents can find activity groups for just about everything, including sports, cards, book clubs and Bible studies.
It’s an interesting market, said Tony Barbee, Pulte’s division president in Indianapolis and Cleveland, because boomers are ready to downgrade their homes but not their lifestyles. He said they’ll want to stay close to family, friends and their favorite shopping, dining and entertainment spots.
“At the end of the day,” Barbee said, “this is going to be their last home purchase.”
While Del Webb targets a niche, builders and real estate agents have noticed most boomers want to live in more traditional neighborhoods.
But that comes with a catch.
David Compton, Pulte’s vice president of land acquisition, said boomers want to live around other single-story homes. They will buy into neighborhoods that offer separate sections of ranch homes, two-story homes and townhomes — but not neighborhoods where those options are intermingled.
“They’ve left that phase of their life,” Compton said. “The kids have left home, and they don’t want to hear the stereo next door. But they’ll live within the same master-planned neighborhood.”
Take Stanford Park in Carmel. The Ryland neighborhood has a section of ranch homes that have attracted boomers and retirees, said Craig Jensen, Ryland’s vice president of sales and marketing. But it also has a section of two-story homes where families live.
“The open concept is big,” Jensen said. “They like the kitchen flowing into the great room, and a sunroom off the back, all of those features that give you a lot of light. Now that they’re sitting at home, they don’t want to be in the dark. They want to entertain, whether it’s a card game or having grandkids over.”
Linda Griffin, 62, moved there after downsizing from a larger home in Granger, near South Bend. She followed her grown children to Hamilton County — she has a daughter in Westfield and a son in Carmel.
A 55-and-older community didn’t appeal to her, so she bought a 2,100-square foot ranch in Stanford Park. She likes the extra-high vanity, the attic storage and the walk-in closets. Although she’s in a section of ranch homes called villas, she can see the two-story homes with larger families out her front door.
“The house is big enough for my children and my grandchildren to come over, but yet a very comfortable size for me in a very comfortable neighborhood,” she said. “And I can still sit and see the kids playing and riding their bikes.”
Back to basics
Beazer Homes, a builder that has emerged as a dominant force locally, has had a typical response to the market. It hasn’t targeted boomers specifically.
Kitchens and bathrooms still sell houses, said Bruce Craig, the company’s Indianapolis division president. Why target your inventory to boomers?
If there’s a market change, he said, it’s that tough times have made people more concerned with the cost of ownership beyond mortgage payments — especially the cost of heating and cooling bills. Under the company’s new energy-efficiency program, he says, customers can save about $1,100 a year on a two-story, 2,100-square-foot home, compared with a similar home 10 years ago.
“People want a stylish home, a quality home and an energy-efficient home,” Craig said.
Today’s market is being dominated by first-time homebuyers, Charles said, and families ready for their first move up to a larger house. He encourages builders to look toward the future market but said that, to some extent, their hands are tied.
The economy has slowed home buying, and builders aren’t starting new neighborhoods as they did during the housing boom of a decade ago. That makes some builders hesitant to target a niche, such as boomers.
Charles suggests such thinking means the housing stock is not changing fast enough to meet boomer needs.
And with financial institutions still largely unwilling to lend money for housing, builders aren’t breaking ground on new neighborhoods. So builders will have to introduce new floor plans or new sections to their current neighborhoods that would appeal to boomers.
Builders conduct consumer research and study demographic changes, said Steve Lains of the Builders Association of Greater Indianapolis, but tough market conditions will make it difficult to alter course until boomers actually start to move.
“I think the financing, economy and availability of land will make it difficult to start new projects until trends show themselves as real versus speculation,” he said.
(c)2011 The Indianapolis Star
Visit The Indianapolis Star at www.IndyStar.com
Distributed by MCT Information Services
A service of YellowBrix, Inc. Publication date: 2011-09-07
Source: By Chris Sikich, The Indianapolis Star