Buying in an active adult community?

[Orchidflower]

Has anyone checked into purchasing in a 55+ active adult community and followed pricing the past couple of years? Please tell me if you have also noticed that--despite the entire country's housing prices going down--the prices in the active adult world haven't gone down at all really. That is one section of the real estate market that really hasn't plummeted. It's a hot idea now.
However, it seems to me that when this baby boom generation starts thinning out that these communities won't be so popular. Of course, that gives this idea about 20 years (or up to 40-50 maybe at most if those born in 1964 go for them) to die out.
After considering this, I am beginning to wonder if buying into a 55+ active adult community is really such a hot idea moneywise. Lifestyle-wise, yes...but for buying a house that lasts that you can pass down then not so much to me. And I have read and reread that the quality of the homes isn't the best often.
Maybe the builder is building not for the long haul. I mean, they don't sound like my old home in innercity Chicago, for instance, where those old brick 2-flats are well over 100 years old now and still going and blowing. Those puppies were built to last and have really well--and escalating in price still like crazy (i.e., from $70K when I sold it in 1982 to about $535K today).
Anyone put more thought into this than I have and have a great opinion on if this is a wise purchase for the long haul or not? I'm thinking it might be a house that if I live another 30-some years that the house won't be worth all that much to pass on as part of an inheritance. Right? Wrong?

[prubin]

Quote:

Originally Posted by Orchidflower [snip] Anyone put more thought into this than I have and have a great opinion on if this is a wise purchase for the long haul or not? I'm thinking it might be a house that if I live another 30-some years that the house won't be worth all that much to pass on as part of an inheritance. Right? Wrong?

IMHO you are putting the cart in front of the horse. Do you want to live in a 55+ community? This is the primary consideration. If the answer is yes the next step is determining location. Then make an informed purchase.

Full disclosure: My answer to the first question is a resounding NO!

[W2R]

Personally, I would LOVE to have neighbors who were only 55+ years old. I am enough of a curmudgeoness that I get very annoyed by kids running across my yard, teenagers playing ball in the street, and 20-30 somethings playing loud music while they wash their cars.

However, I am not interested in a 55+ community due to the other restrictions (and fees) that seem to come with all of these communities. Also, I prefer living in a comfortable old 1960's-1970's home on a big lot (to provide separation from the neighbors). Most 55+ communities seem to be newly built on postage stamp sized lots.

Also, I can see why you have reservations about it if you are planning on leaving the house for your children and IMO you are making a good point.

And finally, I wonder if the community could vote to allow people of any age in, after another ten years or so. Then, all you have is the house which might not be what you would have bought, had it not been 55+.

[Helios]

I have given some thot to a 55+ community, but there is a premium paid to the developer for new houses.
I believe the strategy I would use would be to rent a house inside that I thot met my criteria, and see if I couldnt strike a rent to own or direct sale from the owner, or other owners.
The turnover of houses seems high, and the resales seem to just sit. The entire system is geared towards new purchases. I also have some reservation about living on top of each other, as the yards are teeny. No strategy for that.
Helios

[Orchidflower]

Well, the developers who run these active adult communities make money ONLY on the new purchases, so we can see why more new homes are sold than resales. Of course, the fees and HOA's and all other hidden charges are costly, too.
It seems to me that they are asking for good money on what I understand are mediocre-built homes. This bothers me more than anything else I think. I'm not so sure this isn't just a fad that will fade when the baby boom generation dies out.
Granted, for immediate lifestyle benefits these aac's are great places for many. It's the future I'm thinking about...

[Bestwifeever]

There are some very expensive 55+ communities near where I live. I don't think they offer more activities or services than a typical neighborhood subdivision/hoa would, they just restrict occupants to age requirements. I think they have negotiated some kind of tax relief as there are no children in the division so there is no burden on the schools (vs. if another type of development had been built there), but the properties are so expensive that the tax bills must be outrageous.

The properties probably hold their value as much as other homes. I agree that first you choose if you want the age restriction and then look for the property.

[grumpy]

First - as to the quality of the construction of the homes in 55+ communities: it depends on the builder. Most builders build in both open and in 55+ communities. I know of no evidence that a given builder's construction practices are any different in one type of community than the other.

Second - as to whether home prices in 55+ communities have fallen: we bought our house in a 55+ community in 2004 and moved in in 2005. We paid a base price of $317K. Before the housing bubble burst, the same model house in our community sold for $461K. You can buy a resale of the same model today for around $250K. Prices have definitely fallen although they may not have fallen as far as in open communities.

As to leaving the house to your heirs - in our community, at least one resident must be 55 or older. No permanent residents under age 19 are permitted. Our kids are older than that now, and hopefully, they will be over 55 by the time we kick the bucket. So we are not concerned on that score.

We love our 55+ community. The community is run by a homeowners association (HOA). These days many open communities are also run by HOA's. You need to understand what this means in terms of restrictive covenants BEFORE you move to ANY community run by an HOA, whether 55+ or not.

[In-control]

I am so done with owning things. We are seriously considering renting in a 55 community. Why exchange one headach, a house, for another. Sure I'll spend $1200/month for rent(including heat, water, cable etc..) but my SO and I can just leave and goof of around the world when ever we want and have a nice home base with no surprises or worries. Being in a 55+ community keeps alot of the young noise out and activites of the picture.

[prubin]

I think that folks seeking quiet in 55+ communities may be disappointed when some of the early metal heads turn 55.

[billness]

I am surprised about how much mis-information there is discussed here about 55+ communities. I'm not here to sell you on why you should live in a 55+ community, but I want to at least put to rest some of the rumors discussed here.

First, OrchidFlower, you are correct in your assessment of active adult community prices not falling by as much as regular communities. There are several reasons why this has happened:

1. There are very few foreclosures in active adult communities. This has helped the prices stabilize better than in foreclosure/short sales prone communities. (You can read an interesting article in Fortune about this)

2. Many active adult buyers are more financially well off and do not need to sell their home first in order to buy. Or, many 55+ buyers are paying cash.

3. Many people buying in active adult communities are buying second homes so they are not as affected by the current state of the economy and they are trying to snatch up good deals.

4. Finally, the number of people reaching age 55 continues to grow astronomically and on top of that, the number of people wanting to live in age-restricted communities continues to grow as well. A study released in 2007 indicated that the number of people willing to move to a 55+ active adult community doubled from 18 percent in 1997 to 37 percent in 2007.

Hopefully, that should alleviate your concerns about your home being unsellable at some future date.

Regarding the "Quality of Construction," There is absolutely no evidence to support the claim that 55+ active adult communities as a whole are of lesser quality than other non age-restricted communities. As grumpy stated above, "it depends on the builder." However, some of the biggest names in the 55+ homebuilding business (Del Webb, Shea Homes, Robson, Meritage Homes, Pulte, Lennar) continually win awards from J.D. Power & Associates for highest customer satisfaction surveys (which includes a quality of construction component).

Regarding lot sizes, yes, many of the lot sizes are small but that is because surveys have shown most active adult buyers don't want large yards to take care of. In fact, leaving a yard with a lot of maintenance is precisely the reason many people are so attracted to low maintenance 55+ communities. That said, if you want a big yard, an active adult community is probably not for you.

New vs. Resale: Prices vary by home and community. I know some communities where resale homes are by far better priced than new construction. I also know many communities where the developer has lowered their price well below resale market price. Keep in mind that the new vs. resale ratio changes with the age of the community. Obviously, when a community first opens, the only option is new. Likewise, when the community "sells out" the only option is resale.

The "Rules" in active adult communities are common as with any community with an association and there are typically not any "hidden fees" in most 55+ communities...just your monthly and/or yearly HOA fee (which is fully disclosed to you at the time you buy).

In any event, these communities are not for everybody. Some people love them, others hate them. Regardless of your like or dislike, hopefully dispelling some of the rumors will help you make a clear decision.

Bill

[beowulf]

Interesting that billness's first post to the board reads like a commercial for over 55 housing - plus the moderator had to remove commercial links. I find his assurances meaningless and trite - not to mention unsupported by anything except vague references (not counting the Fortune article, which really says very little).

We are looking into the idea of moving to a 55+ community and have visited quite a few in different locations. It's absolutely, positively true that sales come before anything in these communities - and, once you give them your contact info, they never stop trying. We get a contant flow of calls, e-mails and literature from one community we visited 3 years ago, despite requests for them to stop. Others have stopped when asked, but will still ping us every 6 months or so to see if our interest has been "rekindled."

We also have noticed that some use senior aged realtors to do their selling - so you would feel more comfortable. Not much use when the salesperson is 75 and we are 61. Besides all the things said about the communities, it seems to us that most we have visited play a shell game with prices. The house may be (just an example) $350K, but then they hit you for "lot upgrades" - maybe another $50 to $100K - and it turns out that the only available ones without an upgrade are in very poor locations. Then there are all sorts of "extras" that differ quite a bit from a normal new home community. Fees are always way higher than expected - plus, you don't really know what the true fees will be until the developer sells out and leaves. Until then the monthly fees are subsidized by the developer to make you think they are low. And, unlike working people, it's hard to stomach large raises in fees on a fixed income.

Are these practices restricted to 55+ communities? Of course not - they apply to pretty much any new development. The problem for us is that, at 61, we appeared, in most of the communities we looked at, to be lowering the average age by 15 to 20 years. As to people who buy in such communities being snowbirds, I don't believe that's at all true, except for the very rich. From what we have seen, most folks of moderate means who want to snowbird for several years until it becomes too much of a burden, keep their main homes (wherever that might be) and buy condos in the other location.

I concur with Want2retire that conditions can and may well change. If people can't sell their homes, they will change the rules so that they can. BTW, congrats on being down to 26 days to retirement.

[Orchidflower]

So, you are saying that most of the people at the communities you looked at appeared to be 75-80? From what I gathered about The Village there seem to be more 50 year olds or do I have that wrong?
I've always heard never to buy in a brand new condo community and sounds like the same applies to these 55+ communities, also. I've been told to let the community get some age to see what the fees will be that the owners can live with.
Interesting as all get-out to get two strong opinions on this subject. I hope we get some more as this is really informative to some of us.

[mews]

Quote:

Originally Posted by Orchidflower I've always heard never to buy in a brand new condo community and sounds like the same applies to these 55+ communities, also. I've been told to let the community get some age to see what the fees will be that the owners can live with..

This is very good advice, for both regular and 55+ communities. I live [happily] in a NYC coop, and would never-ever-ever buy into a brand new building or community.

For the demographics, and 'fit' - you should probably rent for a while, if you can.

ta,
mew

[billness]

Orchidflower, most communities will advertise to make it appear as if every person who lives in the community is a very active 55 year old, but of course we all know that every person is different. From my experience, I have noticed that the age of residents tends to follow the age of the community. For example, you would generally find that a community built between 2000-2005 would have younger people than a community built between 1990-1995. That is because a lot of people first buy in these communities when they around retirement age (55-65 on average). And, many of these buyers make it their last home purchased. That said, if you are looking for a community with a "younger", more active crowd, you will generally find it in a new community. If you are more comfortable with an "older" crowd, you should focus on communities that are a bit more aged.

Regarding restonham's comment about "most of the communities we looked at, to be lowering the average age by 15 to 20 years" that is partially true but a true age-restricted community must have at least 80 percent of the occupants be 55 or older. (See Housing for Older Persons Act of 1995). Therefore, 20 percent of the community can be under the age of 55 and still qualify as age-restricted. In some instances, communities have "lowered" there age restriction to allow 20% of the residents to be 40+ or 45+ or 50+ (varies by community) but the remaining 80% of residents must be 55+. However, these cases are the exception, not the rule.

As far as buying "brand new" versus resale. I would always encourage buyers to purchase in communities where the builder has completed all promised amenities (i.e. clubhouses, tennis courts, swimming pools, golf courses). Or, if not, be sure you are buying from a reputable builder who has a proven track record of delivering on their amenities. In my opinion, 99 percent of the communities that are started (by reputable builders) deliver on their promises but there are rare instances when things fall apart (i.e. Levitt & Sons or Del Webb's La Cresta community near Orlando).

Of course, these are my opinions but I have personally toured over 100 55+ communities, helped over 300 buyers purchase in 55+ communities and devoted the last 2 years of my life to researching and writing about almost every 55+ community in the country...so I hope my opinion is worth something!

[heyduke]

Keep posting billness... I am retiring in the near future in 2012 and have not eliminated anything as far as retirement opportunites ... still considering 55+, RV'ing, becoming an expat etc... This researching alone will fill my w*rking life until I am FIRE'd

[Orchidflower]

Thanks for the tips. Del Web went belly-up in Orlando? Isn't he the primary builder of these centers, so what would be the rule of thumb then? Buy from a newer but established center I guess.
It would seem to me that if you lived in Florida--still the mecca for geezers no matter what the rumors--you wouldn't necessarily need to be in a 55+ community as there are so many of you around.
Las Vegas it seems pretty necessary to live in one if you want to live there as the numbers appear to be pretty slim for the over 75 crowd--unless there are new demographics that have been published that I haven't found. Seems like people move there and then leave by 75, which I am guessing has alot to do with the lack of great medical care there. But they had a good 10+ years of Las Vegas sights by the time they go.

[beowulf]

"So, you are saying that most of the people at the communities you looked at appeared to be 75-80? From what I gathered about The Village there seem to be more 50 year olds or do I have that wrong?"

Based on the limited number of 55+ communities we have visited, very few of the residents appeared to be younger than their late 60s, with the majority in their 70s. This, of course, is an incomplete sample. When we asked the agent about the age spread, they seemed to be honest in their assessment that few people moved in under 65. In our fairly wide circle of friends and relatives, very few have chosen 55+ communities and those that did had at least one spouse over 65.

I don't know the rules about the 80% of residents being over 55, but at the ones we have visited I can't remember seeing anyoone who remotely looked like they were under 55 :-).

[billness]

Regarding Del Webb in Orlando, yes, they sort of went belly up. Their community called La Cresta has ceased development "while they work out issues with the developer of the land." Del Webb claims the issues stem from the land developer not delivering on promises. Regardless of who is to blame, there is a half built clubhouse and about 100 unhappy homeowners. I suspect that when the market turns, someone will pick up the project and finish it. It was odd that this happened in a Del Webb community since Del Webb (who is owned by Pulte Homes) is very financially sound (Pulte just bought Centex for $1.2 Billion)

Just because a developer goes bankrupt or abandons a project, doesn't mean the community will fall into a wasteland. For example, a community called Province by Engle Homes in Maricopa AZ (30 miles south of Phoenix) went bankrupt in 2008. Ironically, this community was named the "Best active adult community in 2005" by the National Association of Homebuilders. After sitting in limbo for over a year, Province was purchased by Meritage Homes who intends to complete the project.

In any case, living in a bankrupt community is probably not an enjoyable experience so be sure to do your homework and be careful about buying a promise unless it is from a reputable builder!

[beowulf]

The town of Maricopa (not to be confused with Maricopa County) is a wasteland and prime example of greed and the failure of realtors and mortgage brokers. Many of the home were bought by people using "liars loans" - where they would just make up income that was never checked and by investors who were picking up 3, 4 and 5 homes at a time, with little or no money down, in hopes of turning a quick and large profit. This was/is a problem in Phoenix, Las Vegas and other areas and those who remain in these homes have yet to face the 5 year adjustments on their ARMs which may spell the end for them. Jingle mail - where you mail in your keys and walk away - was a prevalent feature of Maricopa.

There were lots of reputable builders in Maricopa - it wasn't that the houses were poorly made - it was the realtors who sold them to people who could not afford them and the bankers who financed them. All for a buck and now the taxpayers end up footing the bill.

[Orchidflower]

Boy! how p.o.'d would you be if you bought a home in one of those communities and they didn't get finished or ended up being a vast wasteland of empty homes? Pretty angry I'll bet. What a total drag for the honest homeowners...I pity them.