Wealth  Trends:  Even Amid the Housing Slump, American Demographics Create Big Opportunities

Traditionally, one of the easiest ways to make money has been to invest in real estate and wait. Today, though, residential market values are down, mortgage defaults are up, and condos take longer to sell.

However, one segment of the housing industry poised to stay strong consists of homes designed and built for older Americans. Potential buyers should be relatively plentiful because, according to the National Association of Home Builders, the age 50-plus market is housing's fastest-growing niche.

A recent NAHB study sees households in the 65-74 age bracket growing by 4.5 million, or 48%, between 2005 and 2014. The number of people in the U.S. 55 or older is forecast to hit 85 million by 2014. One in five home buyers is 55 or older. "Baby boomers are an attractive demographic because they're affluent and still working," said Paul Emrath, the NAHB housing policy researcher who authored the "Profile of the 50+ Housing Market" study. "According to a 2004 Federal Reserve study, U.S. households in the 55-64 age bracket have an average net worth of $841,000 and an average annual income of $97,000."

That 10,500 Americans turn 55 every day is a fact not lost on Randy Rinehart, 60, a custom builder in Charlottesville, Va. "About half of the eight homes we build each year are for active adults," he said. "It's not unusual for these people to walk in and pay cash for a $2 million house."

Some localities make it especially easy to build for this desirable demographic. Empty-nesters can be a boon to the areas in which they live, as they pay plenty of taxes but don't use an expensive government-supported service: schools.

Maryland's Howard County recently revised its development guidelines so that 250 of the 1,850 homes it allows to be built each year must be set aside for buyers age 55 or older. In an area where the wait for building permits can run five years, developers of age-restricted communities can jump to the head of the line and apply for permission to build more units per acre than are otherwise allowed.

The incentives appear to be working: Half of the 16 age-restricted communities in Howard County were built in the past two years, and 22 more have been approved. Developing age-restricted communities once was risky, as younger buyers with children could allege discrimination. But in 1995, a Fair Housing Act exemption began allowing age restrictions if 80% of the units had at least one person 55 or older.

Active Adults

This is a significant incentive for developers, as it lets them market the benefits of such areas to potential buyers. One perk is lowered taxes, as age-restricted property can be exempt from school levies.

At first glance, communities designed and marketed to "active adults" — which developers say corresponds roughly to the 55-74 age group — often appear identical to other housing developments. Look closer and you'll see accommodations made for easy care and access.

Lawns around detached one-story houses tend to be smaller, since many people approaching retirement aim to cut time spent on home maintenance. Smaller yards also can trim the upkeep bill, and developers can file for lower sewer fees. Security and leisure are important to buyers, so communities often are gated and include hiking trails.

"Remember, these are people who are into cruising, not square dances," said Jay Butler, director of realty studies at Arizona State University's Morrison School of Management and Agribusiness. "They want big houses, garages large enough for two cars and a golf cart, and an attached unit for visiting mothers-in-law."

People age 55 and above want, often subconsciously, homes in which they can age gracefully. A recent survey of design trends by the American Institute of Architects found the most-often requested features are wider hallways, fewer steps and a single-floor design.

"The continued interest in greater accessibility is being driven by baby boomers approaching retirement who are adapting their homes to meet their longer-term needs, along with those who are caring for aging parents or relatives," said AIA chief economist Kermit Baker. "Along with accessibility is the desire for more flexible and less formal living space with a more open layout."

The key to this robust and expanding housing segment is "universal design." It's a concept intended to produce homes with wide appeal, suited to all age groups and varied levels of mobility.

In addition to no-step front doors and hallways wide enough for wheelchairs, universally designed homes have lever door handles and rocker light switches, baths and showers with nonslip surfaces, closets with adjustable brackets, and kitchen pantries with shelves that can be pulled out so homeowners don't have to get down on their knees to hunt for pots and pans.

Ease Of Use

In such homes, accessibility features don't stand out — they blend in. Electric sockets are 15 inches above the floor, not 10. Light switches are five inches lower than usual. Vanity tops are about four inches higher, so less bending is necessary.

Don't tell Robert Tippets, a Salt Lake City developer of 800 active-adult homes, that universal design means one kind of home. Some years ago, 50 houses he built near a Mormon temple rapidly sold to people slightly older than boomers. "I took the same model and began building a community next to a golf course for boomers," Tippets said, "but none of the units were selling."

Tippets recalls that he was escorting prospective buyers through his model homes when he got an inkling of new design demands arising. "I was showing a couple the master suite when the wife says, "That's his closet, where's mine?' " Tippets said. "That told me that boomers want more luxury, whether they can afford it or not."

Today Tippets' firm, Village Communities, builds 70 homes a year averaging 3,200 square feet in size. His 30-acre communities typically contain 150 units that range in price from $400,000 to $900,000. Universal design accounts for about 5% of the purchase price, but is rarely mentioned in sales literature.

"We sell a carefree, lock 'n' leave environment where homeowners don't have to shovel snow or provide landscaping," Tippets said. "Today's active adults aren't interested in downsizing. They want to upgrade their lifestyle."

Copyright © 2007 LexisNexis (by David Devoss in Investors Business Daily), a division of Reed Elsevier Inc and provided by HNW Inc. All rights reserved