Developing a Strategic Plan for the 55+ Market Niche - 1/12/2004 - Real Estate Education Training Schools Conferences

Developing a Strategic Plan for the 55+ Market Niche

The second of two parts about understanding and marketing to 55+ home buyers.

In the first article of this series, we examined the 55+ home buyer market, specifically focusing on pre-boomers and early boomers, their characterstics, where they were likely to live and what type of home and features were more inclined to attract them.

For the second part of this series, we will concentrate on developing a strategic plan to capture more of these buyers.

Whether you think of yourself as a retirement home builder or not, you should develop a demographics-based strategy and your strategic plan should include the following:

• A Sales Forecast Based on Changing Population: Is your current market niche growing or shrinking?

Your sales forecasts and land acquisition decisions should consider the coming change in demographics in your area. You are probably already building retirement homes, even if you are not consciously doing it. Buyers over the age of 55 already purchase one of every five new homes sold in the country.

• Study Older Buyers: The lives of baby boomers and pre-boomers were dramatically different than those of their predecessors, which is one major reason that their housing preferences have always been different.

It’s important to understand the generational histories of residents who are 48 to 67, including the major events in their lifetimes.

• Entitlements: If the entitlement issues in your area are schools and traffic, which buyers do not use schools and do not travel during rush hour?

Share the local demographics with your planning department. The local planning department should know the expected increase in retirees in your community. In almost every county in the country, planners will need to approve more housing to accommodate retirees or force their retirees into resale homes in need of remodeling. Communities do not have to be age-qualified, but the home designs should include downstairs bedrooms and other retiree-friendly amenities.

• Product Design: Plan to include some universal design features in all of your communities. Doing so will expand your sales by including more older buyers without offending any of your other buyers.
  
   
• Borrow Ideas From the Experts: Retiree-oriented communities exist all over the country, including many relatively expensive, smaller projects in the New Jersey area. Visit those projects and learn from them.
  
   
• Purchasing Patterns: Know the local purchasing patterns of your buyers. In most areas, home buying activity declines as people age. But in some areas it actually increases. If you sold baby boomers their last home, have you asked them what they want in their next home?
  
   
• Home Owners Equity: Some areas of the country have far more home equity than others. In some areas, more than 30% of the home owners own their homes free and clear of a mortgage.

What can you do to get these equity-rich home owners to move? Keep in mind that most of these buyer are not as sensitive to rising interest rates as younger buyers, since they probably won't get a mortgage.

• Existing Home Competition: Is your area full of small homes on large lots? Is that really what most retirees in your area want?

Instead, design communities and homes that include features that are in high demand, yet do not exist in sufficient quantity in the resale market. Analyze the resale housing stock in your market.

Don't let your competitors develop a retirement housing strategy before you do.

The retirement sector will be one of the fastest growing sectors of new home demand, based solely on the highly reliable projected growth in population over the age of 55. Using very reliable Census data, we expect the number of retirement homes sold per year to increase by 49% from 455,000 last year to 680,000 in 2010.This is a market that is waiting to be served.

To Read Part 1 of This Series ...

To read, "Who Are Today’s Over-55 Buyers?" the initial article in this series published on Dec. 22, click here.

John Burns is the president and founder of Irvine, CA-based John Burns Real Estate Consulting, Inc., which analyzes, summarizes and monitors local market conditions; helps companies refine their strategies in an ever-changing environment; and completes customized consulting assignments to help them with land acquisition, market expansion or strategic planning decisions. His company produces the Retirement Housing Boom report that can be customized for each market in the country. Burns is an active member of the NAHB Seniors Housing Council. He can be reached at 949-262-3228 or jburns@realestateconsulting.com.