Active-Adult Housing Resists Harsh Recession
Thursday, May 28, 2009
By Polyana da Costa, DBR.
Daily Business Review
Can baby boomers help boost South Florida's housing market? Real estate agents and local builders say South Florida housing developments that cater to buyer who are 55 year or older are weathering the recession better than the rest of the market.
Although seniors are far from immune to the economic downturn and the depressed housing market, they represent one of the best groups of potential buyers right now.
Many can pay cash, aren't impacted by the unstable job market, and are not willing to postpone their plans and wait for the market to change as they age.
Real estate agent Jeff Katz knows many colleagues who are struggling to sell homes in this down market. But for him, "business has never been better."
Katz specializes in representing potential buyers in so-called"active adult" developments, those that cater to residents 55 or older and attributes his success to that niche, which includes about one-fifth of all buyers in the U.S.
This year he has closed or put under contract nine homes in Palm Beach County. Last year, for the first time in his seven years in the business, he ranked among the top 100 ReMax agents - out of 4,000 - based on commissions.
"it was definitely because of my specialty," he said. "If I specialized in something else, I would probably have been hurt just as much as the other agents [in the overall market]."
He focuses on properties varying from $300,000 to $600,000 and said about 90 persent of his clients are from the nation's Northeast region.
Like Katz, local builder also say the active adult market is weathering the recession better than other residential sectors.
G. L. Homes is marketing houses for sale in two active adult developements - Valencia Pointe in Boynton Beach and the Valencia Reserve in Delray Beach. Between the two developements, G.L. has sold more than 100 homes this year, totaling about $36 millions in sales, said Marcie DePlaza, G.L. Homes' division president.
About 60 percent of the buyers are paying cash, she said. They include retirees moving from the Northeast, cost-conscious buyers relocating from country club communities where thay have to pay thousands of dollars in annual membership fees, and others who were priced out of the market during the housing boom and are now finding bargains.
"Between those three groups, we have done very well," she said.
About half the units that went under contract his year inthose developments have yet to close, but DePlaza said she considers them done deals. The contract default rate in G.L.'s active-adult communities over the past year has been less than 2 percent, she said.
"And unlike during the boom nowadays people are buying with their eyes wide-open," she said.
Adam Rosenblum, vice president of marketing and sales for Palace Management Group, which developed the Palace at Weston, another active-adult community, said if buyers weren't such reliable closers, his project would have been in the same trouble as many others across South Florida.
"We are able to close about 90 percent of our contracts," he said of the 382-unit project that was compelted in 2007 and caters to 55 and older buyers.
Many developments that were completed in 2007 and 2008 failed since buyers refused to close because of the declining market. many walked away from large deposits.
but for people like Rhonda Moses, walking away from contract wouldn't be an option - even if that meant loosing $100,000.
Moses, 57 and her 55-year-olde husband closed on the $446,000 purchase of a house at G.L. Homes' Valencia Pointe last month.
The new Jersey couple had signed the contract last year, right before the financial market collapsed in October.
"I knw the price of our house had gone down about $100,000 over night," she siad. " But we did not hesitate to close. If we were younger, maybe I would be more concerned., but my husband was burtn out and I thought it was th right time to make the move. We are not wealthy people but over th course of tim eit is not going to make that much of a difference."
Moses said she was able to get some free upgrades from the builder at closing.
As they age, many buyers aren't willing to wait for the market to improve, Katz said. And with the prices "bottoming out, "older buyers who were priced out of the market during the boom years are now coming back.
"There is a group of people who have been looking to buy a retirement home for about 10 years. They see the market is down and say, "Why notmake a move now?" Katz said.
Also, many retirees have saved enought to buy with cash in a market where it's very difficult to get a mortage, said Brad Hunter of Metrostudy, which tracks hosuing data in South Florida.
And becuase their careers are largely