Retirement Housing investments can go down and down as well as up.

Trying to make money out of people who want to retire (whatever that is) and move property is a risky business.

Of course success and failure is welded to what is happening in the wider property market but also to the financial health, or perception of health, of older consumers.

This article illustrates that Canada (British Columbia) is no different to the UK. The start of the article says it all.

Offering mountain view and golf on the doorstep, developers spared no expense to draw retiring boomers to British Columbia. Too bad about the timing, though: Utopia is now in creditor protection.

By its very nature property is a long term investment although if you tell that to somebody who bought at the peak of the market and who has seen their investment wealth shrink by 25%+ that insight may not be that welcome. Dick Stroud

What type of housing do the 50-plus want?

Back in April 2009 I wrote about a report from MetLife Mature Market Institute (MMI) about housing and the 55+ Market.

The second part of the study has been published that is based around two surveys. One looks at what builders are building, compared to what they were doing in 2002. The other looks at what the older customer actually want.



Here are some of conclusions:

• About two-thirds of respondents (63%) plan to age in their current homes, while 12% plan to buy another home. About one-quarter (26%) are not sure.
• Preference for suburban life: The majority of respondents prefer a home in a suburb, with 32% wanting to live in close-in suburbs and 31% in outlying suburbs. In comparison, 28% prefer a rural community, while only 9% want to live in a central city.
• One-level living: Respondents overwhelmingly prefer a single-story home (79%) over a two-story home (15%) or a split-level home (7%).
• “Same-Sizing” the New Home: More than half of respondents (51%) prefer three bedrooms, while 18% want four or more bedrooms. About three-quarters prefer the master bedroom on the first floor.
• The top five inside features: The five features rated most important were: washer and dryer in the home/unit, storage space, windows that open easily, master bedroom on the first floor in a two-story home, and easily usable climate control (thermostat).
• Green Is Good - but not key: About one-quarter of 55+ respondents do not care about the impact building a home has on the environment. While another 23% said they are concerned about the environment, it does not drive their decision to purchase. Only 12% said they would pay more for an environmentally friendly home.
• Local amenities: Most respondents listed proximity to a shopping centre as influencing their choice of a new community (57% noted it as Somewhat to Very Important), followed by proximity to a hospital/doctor’s office (55% rated it as Somewhat to Very Important).
• Lots of broadband: Technology features are important to 55+ consumers, with 83% of respondents rating high-speed Internet access as Somewhat to Very Important.

One of biggest gaps between customers and builders is the provision of services such as interior and exterior home repair, transportation, housecleaning, etc., as consumers clearly strive for a maintenance-free lifestyle. There were a lot more areas where customers and builders were on different sheets.

If you are in anyway involved in the 50-plus housing market then you must read these two reports. Dick Stroud

Silverville – life in a UK retirement village

The programme describes itself as: “following the lives and loves of some of the 350 residents of a new retirement village in Milton Keynes. How will they cope - and how can they thrive - as they get to grips with a different way of living?”

The first programme was shown last evening but can be still be viewed (if you are in the UK) using BBC iplayer.

I am not sure what to make of it. I fear that the need for human interest stories will dominate what could be a fascinating subject. Probably best to wait until the end of the series to comment. Dick Stroud

Housing and the 50-plus

A couple of interesting takes on what is happening in the housing market for the 50-plus.

It appears that the "active adult communities" in the US – I guess we would call them retirement villages in the UK - have not powered ahead in the way that had been predicted.

Conventional wisdom had home builders anticipating a wave of early-retiring boomers jumping from their family homes to active adult communities, leaving lawn mowing behind as they spent their pre-golden years golfing and taking cooking classes.

So far, the wave has yet to build. Sales of homes in active adult communities are growing, but not by leaps and bounds. According to the National Association of Home Builders, the percentage of 55-plus home buyers (in the US) who opt for active adult living has grown from 2.2% in 2001 to 3% today. That means 97 percent of them currently are not moving to adult communities.

This article provides a very sound set of arguments why the growth in the market has not occurred, some are to do with the recession, some are not.

At the much older end of the 50-plus age spectrum, when people require care services, all is not well. The US has exactly the same problem as the UK with paid care being expensive and individuals and government lacking the funds to provide.

This post in AgeingPlaceTech spells out the reality.

All is not well in the world of housing and the 50-plus, but a place with zillions of business opportunities. Dick Stroud

If you are interested in 50-plus housing

This US blog posting is useful if you are interested in trends in the older market for housing.
Certainly in Europe we have followed, certainly pre-recession, a lot of the trends set in the US.

The report references a new report from MetLife on the subject. You can download that from here. Dick Stroud

Property slump costs pensioners £220 Billion - maybe

This was the headline of an article in the Guardian.

I am not so sure.

The implications of the article are this:

• Total value of pensioner’s property now equals £800 Billion hence
• Original value was £1020 Billion so
  
• Each pensioner is supposed to have lost £52,000 of the value of their property meaning
• The number of pensioners owning property = 4.2 million but
• Total number of people in the UK aged 65-85 = 8.7 million meaning
• 48% of pensioners are property owners but
• Total property ownership for the UK is 70% and
• Older people have disproportionally high level of property ownership conclusion

Either my arithmetic is wrong or the originators of the research screwed up and the total loss is even higher. Both are possible explanations.

Whatever the answer it means that older people have suffered a big dent in their wealth (and their kid’s inheritance) to add to a list of woes including near to zero interest rates on their savings but...

Like all analysis, the averages only tell part of the story. Dick Stroud

Ageing in place

Every so often you see a business idea and think it is wonderful.

Do you want to understand, I mean really understand the cutting edge technologies and design that that support ageing in place.

Well rather than attend a lecture, or reading a book, you can live in a home equipped and designed to the very best standards. Just have a look at the beautiful design of this home. Dick Stroud

Ruppies are not the same as Rupees or Boomers

I have to say I have never heard of the term Ruppies, maybe I should, but I haven’t. Apparently it describes: “retired urban people who are active mature adults and predominantly affluent empty nesters.”

This paper makes out an interesting case for how your Ruppie differs from a bog standard Boomer. A lot of the argument is around their preference for urban rather than rural living and their desire to keep working and working. Methinks that the last 18 months have probably changed a lot of the thinking of Ruppies and Boomers alike. Dick Stroud

Small is beautiful?

Matt Thornhill has an interesting feature in his newsletter titled: “The End of Housing Excess”.

It appears that the American dream is shrinking.

For the first time in at least a decade, builders are substantially reducing the size of new houses. The director of research for the National Association of Home Builders says growth in the average size of new single-family homes, which went from 1,750 square feet in 1978 to 2,479 in 2007, is starting to reverse.

It would seem that Boomers are also looking for smaller abodes. This seems to be partly driven by necessity but also by a desire to de-clutter their lives.

The article ends with the warning/prediction: “As housing goes, so go other sectors of the economy, from furniture and home furnishings to appliances and home repair.” You have been warned. Dick Stroud

You can always rely on bank “mum and dad”

MoneyPlus, the magazine published by Standard Chartered, has an article about the extending period that children are dependant on their parents for money. The article is actually called: “How not to be helicopter parent” – the sort that ‘hover’ over their kids every financial decision. I would think this is easier said than done.

There were a few facts in the article that caught my eye. How true they are I have no idea but I suspect they are in the right ball park.

40% of parents worry that they will be saddled with their kid’s debts

9% of men are still at home when they are in their 30s

23% of graduates are still at home and 53% have delayed buying a home by 6 years.

76% of first time house buyers (under 25) couldn’t afford a property without their parent’s assistance.

All these figures are pre-recession – so the situation now will have got even worse – assuming parents perceive having their adult children living at home and still requiring their financial help, a bad thing.

Bottom line all of this argument is that parents, many of them being 50-plus are important elements of their children’s decision making process for large capital purchases. Marketers should understand that. Dick Stroud

Recession take its toll on senior living communities

Like all other parts of the housing industry the UK’s retirement villages must be feeling the heat. I am not sure if it just making them warm of about to catch fire. Kelly Kilpatrick writes about this industry in the US so I thought it would be interesting if she told us how retirement housing (senior communities) are faring in America. This is what Kelly had to say. If you have any questions you can contact Kelly at kellykilpatrick24 at gmail dot com


As the recession continues to affect people of all ages, seniors are being hit hard at the wrong time in life. Many people who had thought they were solidly vested in companies saw millions of dollars slip through their fingers in a few short months. Put that in with the constantly fluctuating gas prices, impending doom on various geopolitical fronts, and you have one scared group of consumers.

People who are still fortunate enough to have the resources to retire comfortably will have some serious decisions to make in the coming months.

Over the last couple of decades, senior communities have grown exponentially across the United States. Many are owned and managed by large, reputable firms that cater to the most discerning of seniors. Many facilities offer onsite golf courses, condos, homes, health care, workout facilities—you name it.

However, with budgets tight and the prospect of moving from the homestead into uncharted waters is likely to leave seniors holding out for evidence of some upcoming respite before getting rid of any more assets. Often, seniors simply sell their homes and move to a new area to enjoy their retirement years.

With the housing market diving way down and the uncertainty of the future becoming more evident as the days pass, it’s looking like senior communities may end up taking a big hit in the coming months. For those seniors who have been fortunate enough to come out fairly unscathed, checking into a community owned by a large corporation may also seem like a bad idea, if recent events are any indicator.

On the other hand, there are many who might think it is a wise move to by into one of these communities while it’s still a buyer’s market. After all, more and more Baby Boomers are retiring each year, so these communities to stand to see some explosive growth in the coming years if the economy can just get turned around.

As it stands, people seem to be staying in their safety zone—at least for the time being. With the changing of the guard coming up and new policies and procedures going into effect, we can really only wait with bated breath to see what comes next.

Trends in house building

Remember that time when people were interested in new houses? As the consumer electronics companies pack their bags and leave Las Vagas the Home Building industry arrives for its annual bash. I cannot think that will be a happy event.

BusinessWeek has an article about the main trends in house building. Most of them make sense. It is interesting to see that “Ageing in Place” has now made it into the list of top requirements. Dick Stroud

Nine (not 8 or 10) Baby Boomer money makers

Forbes has an interesting article (s), some might say an idiots guide, to how to make money from Baby Boomers. If you don’t want to read the text, have a look at this slide show.

Can't wait to know what the 8 money winners are?

1.Nutrition/Weight-Management Consultant
2.Travel Agency
3.Errand Service
4.Financial Adviser
5.Specialty Contractor
6.Beauty Salon/Spa
7.'Cosmeceutical' Retailer
8.Health Club

The article has that “Friday afternoon” feel about it so wouldn’t give it too much credence, despite its well respected publisher. Dick Stroud

Reverse mortgage (equity release) doing badly

I am not sure how it is doing in the rest of the world but in Australia the reverse mortgage market is in full-scale retreat. The fourth lender this year announcing that it is pulling back.

ABN Amro is still in the market but has admitted that conditions were tough. A spokesman said – the quote is taken from The Sheet (subscription only):

“Because of rising interest rates the lifestyle borrowers have disappeared. These are the people who don’t need the money to buy a new car or repair the roof but would like some extra money for travel or to improve their quality of life in retirement in other ways.

“What makes this market tough is that the payback on a reverse mortgage is very long term. Figures from the US and Europe show that the average life of a loan is seven or eight years.

“You get no cash flow during those years and you have to cover set-up costs and commissions. Securitisation gives you some cash but that’s not an option now.”

So companies selling these products to the older market are getting hit both by a decline in demand and the inherent long term nature of the business. I guess that high interest rates and lack of wholesale market liquidity doesn’t help.

I still think that this will be a fantastic long term business opportunity, because for a lot of people it will not be a 'lifestyle' choice but a necessity, but looks like success will be delayed for a while. Dick Stroud

SKI is alive an kicking

The dreadful term Spending the Kids Inheritance (SKIing) is one of the few age-jargon phrases that has stuck in mainstream language.

I am always very caucsious of taking too much notice of research from organisations with a vestied interest in the outcomes, but I must assume there is a grain of truth in the findings from SAGA’s equity release (reverse-mortgage) group. In summary the survey of oldies found:

12% said equity release products were not an option for them because they believed assets like a home should be handed down to their children as an inheritance.

12% answered that they had released equity from their home to pass on to their family as a pre-inheritance.

25% said they would use the equity tied up in their house to enhance their retirement regardless of their younger relatives' expectations of an inheritance.

What the other 51% thinks remains a mystery – good old SAGA refrained from publishing a press release about the research (daft).

18% of the over-65s said they considered equity release to travel around the world, a figure that doubled in the age group between 50 and 54.

Not that great a reading for kids and grandchildren. Dick Stroud

Boomers and housing

Judy Schriener is writing a book about the way Boomers are impacting housing design trends. I hope she publishes it soon since there are a lot of people wanting to know the answers.

The headline points made in the article are:

• Many Boomers don’t want to retire. Instead, they plan to take new jobs, start businesses, or involve themselves in volunteer work.
• Many want to stay in town, close to transportation. It is estimated that 60% of Boomers who move stay within their county of residence.
• There’s a clear aging-in-place movement, in which over-50s remodel their homes instead of moving.
• A growing number of university-affiliated retirement communities promise a rich cultural and intellectual environment.
• There is a rise in special-interest communities devoted to pursuits such as music, theater, fishing, or fitness.

I totally agree with Ms Schreiner’s conclusions: “don’t target people by their age but by their lifestyle”. As she says people in their 60s with kids are different from those with grandchildren. And single mothers of similar age are different from empty-nesters. It’s not a homogenous group. Absolutely. Dick Stroud

Property that ages with the owner

The UK Government generates a torrent of rules and regulations. Some are good some are bad (mostly the latter) some get buried in the bureaucracy never to see the light of day.

Yesterday a new set of rules emerged (Lifetime Homes). This time they are to do with making houses age-friendly. To start with they are intended to be ‘guidance’ - until 2010 - with the threat that they will become legal regulations if the building industry doesn’t behave and adopt them.

In practice we might well have a new Government by 2010, most certainly the Government Minister will have changed a couple of times and the building industry will have had a chance to noble the civil servants. My bet is the end result will be nothing changes.

For those of you interested in residential housing for older people these are the things they are supposed to have:

• Bathroom to allow side access to bath and toilet
• Space for a stair-lift.
• Space for a platform lift to the bedroom
• Low window sills
• Walls able to take adaptions
• Space for temporary entrance-level bed
• Living room at entrance level
• Distance from car park kept to minimum
• Easy route for a hoist from bedroom to bathroom
• Sockets and controls at convenient height
• Entrance-level toilet
• Doors and hall wide enough for a wheelchair
• Space for wheelchair turning circle in the living room
• Threshold to home covered and lit
• Parking space capable of being widened
• Level or gently-sloping approach to front door

Most of them are very vague and open to a wide range of interpretation. Dick Stroud

Retirement housing – a few interesting ideas

The concept of ‘cohousing’ is one I haven’t heard before. Well there is an association for ‘it’ in the US.

Cohousing (according to the Web site) is a type of collaborative housing where residents actively participate in the design and operation of their own neighbourhoods. The developments are usually attached or single-family homes along one or more pedestrian streets or clustered around a courtyard. They range in size from 7 to 67 residences, the majority of them housing 20 to 40 households.

There is a sub-group of cohousing for older people. In Europe there are examples of groups of likeminded people coming together to have their own properties and supporting facilities created. This has always sounded a nice idea in theory but I have always wondered how it works out in practice. What it does indicate is the demand for a more personalised version of retirement housing that will be required in the coming years.

The conference of Australia’s Retirement Village Association produced some interesting research.

Here are few of the factlets (well more like observations) that emerged during the presentations:

The largest sector of over-55s will stay in their own homes with rapid growth in home renovations and modifications to suit age limitations.

90% of people aged over 60 also will stay in their own country (Australia)

Of the rest they will move to country or seaside areas and currently only 5% into retirement lifestyle villages and then after age 75.

Over half of the over-55 age group will still work in some capacity with 60 per cent still servicing a mortgage or other debt and even more without enough superannuation to retire.

Many retirees will remain in the big family home to accommodate adult children returning to live with them while they return to study or recover from broken relationships.

Independent and assisted living units are viable inside malls with lift access and the security of a protected mall that includes food outlets and medical centres. This is a worldwide trend for over-70s to meet at malls and use the temperate interiors as an exercise and socialising arena. Good grief I cannot think of anything I would less want to do!

What a hotch potch of contrary indicators. I guess it illustrates the diversity of the 50-plus age group. Dick Stroud

How to delight women, gays and baby boomers

If you don’t, you should subscribe to the newsletter from Trendwatching, which is an opinionated consumer trends firm that takes a global view on what is driving consumer behaviour and most importantly consumer spending. I really like its style and the scope of its coverage – like the comment about the photo. Yes, we know these pictures are cheesy.

This month’s edition has the eye catching title of “How to delight women, gays and baby boomers”.

It is has some good examples of what is going on with the boomer consumers and the products that are tempting them in the categories of dating, health, travel, homes and housing plus another half a dozen product groups. Definitely worth a look.

What it doesn’t do – I suspect because of space problems – is to look at the interaction of these three groups. Now that is really interesting and a subject I am going to blog a lot more about. Dick Stroud

Equity Release in the US

This is a detailed research report from Fidelity Research Institute that analyses the US housing market and the future of equity release (reverse mortgages).

If you are interested in real estate or the future of funding retirement then this is worth downloading. The bottom line message is - housing is a bad bet as a retirement asset. Dick Stroud