Once again, the baby boomers are changing housing
The post World War II American story is well known. With the GIs returning home en mass immediately following the end of World War II and fueled by a sense of optimism for a bright future, marriage rates increased steadily, city population declined, and the baby boom generation exploded onto the scene.
As a result, quality housing for the influx of new families became the salient issue, as demand exceeded supply tremendously. Iconic developers, such as Levitt & Sons, Inc., seized the opportunity to fulfill a market void by constructing mass-produced suburbs, produced under the tenets of speed, efficiency, and cost-effectiveness. Other developers quickly followed and continued to meet the demand, thus creating the archetypal suburbs, which still live on in the 21st century.
The story of the baby boomer generation is similarly well known. With their sheer numbers, their middle class suburban upbringing, the innumerable social movements that characterized that 1960s and 1970s, and their education and affluence, the baby boomers changed everything in their path. Just like their parents—and even more so—the housing market adapted to their desires, beginning with the garden apartment movement in the 1970s when most were just starting out, peaking in the 1990s with the McMansion craze at the peak of their earning power, and now, for some, transitioning to a desire to down-scale and live in communities that were built specifically for them. In a 1990 New York Times article, James W. Hughes, then chairman of the Department of Urban Planning and Policy Development in the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, noted that, by the year 2000, “the broad maturing middle-age population is going to do to the upper end of the housing market what they did to the school systems in the 1960s – push it to the limits.” His 1990 analysis was certainly prophetic, with a housing bubble forming in the late 1990s and early 2000s, and an accelerating age-restricted marketplace.
However, with the recent over-arching economic troubles, the housing industry has been hit hard, with developers seeking creative measures to retain as much solvency as possible in their ventures, especially in the age-restricted housing market. Since 2005, when the deterioration of the housing market began, it has been widely reported that sales have declined, inventory has risen, and as a result, home prices have declined. Once again, baby boomers and those slightly older are entrenched in this latest housing phenomenon, as some older people have begun to leave New Jersey for cheaper and warmer locales at a steadily increasing rate, while others have had an increasing preference to age in-place. With the influx of housing inventory, some baby boomers have also been unable to sell their present homes, forcing them to re-think housing changes.
As such, with baby boomers again reshaping the housing market and the affinity towards age-restricted communities beginning to wane in this economic downturn, developers are beginning to wonder how to tackle this issue, with some seeking to remove the age-restriction on their communities and replace with either an open market or an age-targeted designation.
According to Jeffery Otteau, a leading market analyst and proprietor of Otteau Valuation Group, Inc., in New Jersey, there are numerous projects for which age-restrictions have been lifted or lowered, including those in Maplewood, Fort Lee, Hackettstown, Mountain Lakes, Bound Brook, Princeton Township, Morris Township, Pine Hill Township, and Riverdale Borough. With the impacts of the recession hitting New Jersey relatively hard, municipalities cannot afford to let some newly built communities to amble on with low occupancies.
With economic feasibility becoming an issue for age-restricted housing, due to a lack of interest in bank financing due to higher construction costs, discounted market pricing, and an oversupply of projects, age-targeted housing is becoming an attractive option.
New Jersey lawmakers are now starting to realize that vacant, unfinished, or minimally populated developments present a complex trifecta—physical, psychological, and political—of problems. The experts agree that there is an abundant supply of age-restricted housing, and in my opinion, to just let projects remain in a static state is an untenable position.
So, what’s the solution? Lift the age-restriction on housing reserved for those 55 and older, lawmakers say, and in doing so, require that the developer set-aside 20% for affordable housing. All in all, if executed property, it’s a perfect carrot-and-stick approach. Not only would this serve as an inducement for bank lending and smelling salts for dormant developers, but it would also create more construction jobs and, perhaps most importantly, inspire some confidence in the people. Never discount the psychological impact of seeing active construction sites in a down economy.
Naturally, the opponents have emerged, and the paramount point of contention is that lifting the age-restrictions would result in an influx of school-age children into local school systems, thus potentially spiking already onerous property taxes. Certainly a way to strike fear into the millions of NJ residents paying exorbitant property taxes, but it’s a misinformed statement.
As I will demonstrate in an upcoming post, couples with school-age children are not generally drawn to developments originally designed for the 55+ cohort, as the living arrangments and amenities are simply not tailored to a family lifestyle.
Welcome, age-targeted housing.
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