Spike in Active Adult Market Expected

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by Gigi Giannoni, Evolv

Housing news is getting better, despite continuing foreclosures and job losses. People are still buying and selling homes and moving for jobs, or in the case of active adults, to be closer to family and friends.

According to Fannie Mae, the recession is unofficially over. Although that might be slightly premature, we are seeing a lot more activity in certain pockets across the country such as Austin, Texas and Washington D.C. Certain cities in Georgia, Tennessee and the Carolinas are enjoying the relocation of many active adults from Florida. Atlanta is showing activity, particularly in the outer suburbs and throughout Forsyth County.

Today's active adults haven't shied away from buying their next home. In many cases, they want or need to sell their existing home first. However, in other cases, they will buy regardless of selling because they simply can. In communities such as Jim Chapman Communities, Soleil Laurel Canyon and Del Webb, there has been an increase in activity since the first quarter of 2009. The current trend reflects that their homes are selling faster and they are ready to buy, customize their home with upgrades and move-in much quicker than before. Although many still want to build their home, if they have sold theirs already, they are willing to buy and move in now.

As we enter 2010, the pace will reflect the renewed commitment to the newest tax credit of $6,500 ($3,250 married filing separate) for home owners that must have used the home sold or being sold as a principal residence consecutively for five of the last eight years and purchased by April 30, 2010. In addition, one can still take advantage of the first-time home buyer tax credit of $8,000 ($4,000 married filing separate) also expiring by April 30, 2010. For the 50+ demographic, the $6,500 tax incentive is not only new and enticing but also comes at a time when the market is emerging and buying opportunities/deals are still out there. This new tax incentive will also help the active adult buyer to sell an existing home much quicker than before.

Because of the tax credit, we will see a spike in activity come the first quarter of 2010. It will not only influence the selling habits but also buying habits, creating the momentum many expect, especially in our target demographic. Atlanta builders are starting to pick up the pace when it comes to new housing starts. Approximately 1,152 homes were started in the third quarter of 2009. This constitutes an increase of 17 percent compared to second quarter starts.

In addition to the tax credits, still-low mortgage rates will positively influence the housing market. Thirty-year fixed rates are at near-record lows. The average rate on a 15-year, fixed rate has fallen to 4.32 percent. Bundled with the re-adjustment in pricing in the housing market and the tax credits, the qualified buyer is primed to make the selling and buying decision.

With Forbes ranking Atlanta number one among America's "recession-proof" retirement markets, we will continue to see activity among active adults relocating within Atlanta. With the growth of 50+ markets in Forsyth and Cherokee, we see people moving away from the city to pursue their activity-rich lifestyle in the suburbs and beyond. Atlanta has also ranked 17th for income of residents 65 and older, which is reflective of why active adult communities continue to be successful.

The key to the future of lifestyle-oriented active adult communities is the quality of life the developer/builder will create for the consumer. This will be reflected not only in the quality of construction and finishes but also in the quality of the "neighborhood" that has been created, the on-site diverse amenity package, transportation access, landscaping that allows for privacy, views that invite you out to the patio and streetscapes that are well planned and inviting. On-site management teams will see greater demands for activities and services.

Baby boomers are on the move. Those that still work might need to follow the jobs. Those that no longer work will follow their children or relatives. Either way, this demographic provides a shining light within the real estate chaos we are experiencing. The number of active adults will only continue to grow. The question remains whether developers and home builders can meet the changing demands of savvy and experienced 50+ buyers. We shall see.