Justin Auciello: The New Wave Planner

SO WHAT IS AGE-TARGETED HOUSING?

In my March 20, 2009 piece, I opined as to why, due to the economic downturn, a  shift in housing preferences, and various other reasons, municipalities should lift age restrictions on previously approved developments in an effort to stimulate development and improve communities.

If the bill in support of lifting the age restrictions meanders its way through the New Jersey Legislature successfully and is signed into law by Governor Corzine, then this will become reality.

The New Wave Planner supports this measure wholeheartedly.

But, wait a second.

Shouldn’t all of the 565 municipalities within the Great State of New Jersey be fearful of such a bill that could result in more children within the 616 school districts (yes, this is not a typo; New Jersey has 565 municipalities and 616 school districts), increased demands on municipal services, and therefore spikes to already burdensome property tax bills—all in the midst of the worst economic downturn since the Great Depression?

This just doesn’t sound right.

Some politicians are against lifting these restrictions, and I cannot blame them for one reason: for better or worse, it’s what they have to do.

I understand the political intricacies in New Jersey—which is a “home rule” state, meaning that a lot of power is vested in local government—and like anything else, it boils down to being “all part of the game.” In order to save face with their constituencies, Mayors have to sometimes vocalize their disagreements relating to certain initiatives, especially on such an issue that is so volatile in New Jersey.

The public perception is that “property taxes” and “school age children” are both dirty words, and as such, understanding local politics, speaking out against this is just a method through which one can ultimately win the game.

However, as I will now argue, not supporting a lift on restrictions could actually be detrimental to communities, given that, even though there are public perceptions to the contrary, “age-targeted” communities do not place excessive demands on municipal services and school systems.

So, what is an age-targeted community?

Understandably, there is much confusion with respect to the difference between age-restricted—developments that are restricted to those 55+ and have specific amenities catering to that cohort—and age-targeted communities.

In an October 2, 2008 Asbury Park Press article, “Age restriction becoming a drag,” Linda Bernaski, president of the Shore Builders Association of Central New Jersey, noted that wholly age-restricted communities have been well known among municipal elected officials as being the most attractive residential land use, mainly due to a lack of children burdening school districts, which is one of the reasons for New Jersey’s high property taxes.

While certainly a valid concern, a designation change to age-targeted does not open the proverbial flood gates of families with school-age children rushing into these types of developments. In the current marketplace, the emphasis is not primarily on age, but rather on the quality of the living experience.

Age-targeted communities are designed and positioned to attract mature households, but they are not marketed as 55+ communities. Tracy Cross, a housing consultant and president of Tracy Cross & Associates, Inc., noted, in a September 18, 2005 Chicago Tribune article, “Do you want age-restricted or age-targeted?,”  that “almost any condo is, by nature, age-targeted,” since the “newer condo buildings have the features that an older person would be looking for, such as an elevator and outdoor maintenance.” Other characteristic amenities include, but are not limited to, indoor or structured parking, master bedroom suites located on the same floor as the living room, dining room and kitchen to minimize the requirement of stair usage, modest bedroom capacities consisting primarily of one and two-bedroom floor plans; en-suite bathrooms that are captive to the bedroom areas to which they are attached, and the lack of exterior recreational facilities designed for the use by children.

Even though age-targeted communities do not prohibit those age 55 or under, the use of affirmative marketing techniques, such as using buzzwords like “care-free living” and “maintenance-free living,” appears to attract a market share that does not include couples with school-age children.

A potential explanation for the predominant market share of couples without children is the psychological impact of the types of words associated with aging. Bill Feinberg, whose Philadelphia-based consulting firm Feinberg & Associates works with several builders, stated that half of the people whom his firm interviewed in four focus groups in 2004 said they were not interested in any community labeled “age-restricted,” as discussed in a January 2004 article in Builder. Age-targeted communities also attract younger couples without children for similar reasons.

Doris Pearlman, a real estate and design industry veteran, in January 30, 1998 article in RealtyTimes, “Emerging Buyer Profiles: Who Will Dominate Tomorrow’s Market?,” opined that the demographics of housing changed during the late 1990s, when “buyer profiles started combining and recombining.” Up until the late 1990s, according to Pearlman, the industry had been generally traditional, consisting mostly of “first-time buyers, move-up buyers, third-time buyers, or middle-age high-achievers.” The late 1990s and early 2000s, which coincided with the oldest baby boomers becoming empty nesters, saw a shift in the dynamic, with “full-circle buyers” (older couples that are not ready to purchase a unit in a retirement community) vying for homes not just with first-time buyers (reflecting the commonly known desire to downsize homes to minimize unneeded space and costs associated with larger homes), but with “free-spirit buyers,” “who may be divorcees with children, same-sex couples, unmarried but related roommates, or the so-called “dinks” (double income, no kids).

Although this example of shifting housing tastes is broad and not necessarily applicable to any specific housing type, it demonstrates the dynamic nature of demographic changes over the past decade, and the blending of cohorts that are seeking similar housing experiences.

While there are no widely available demographic multipliers for the relatively new age-targeted market, the fact that apartment/condominium living imparts a slight impact on a school district, compared to that of single-family homes, is a substantive argument in favor of a change to age-targeted housing.

The Center for Urban Policy Research at Rutgers University publishes demographic multipliers that are widely considered the de facto source for housing demographic profiling information in New Jersey. According to page 6 of the November 2006 release,  Who Lives in New Jersey Housing, “in general, detached housing currently produces the highest number of residents and pupils compared to attached homes. Detached homes with more (4-5) bedrooms have the relatively largest household size and pupil generation.” However, it continues, “common types and configurations of attached housing, such as 2-to-3 bedroom townhouses and 1-to-2 bedroom multifamily units, have a relatively low demographic impact.” Parenthetically, it should be noted that the study notes that “demographic multipliers need to be continuously updated, refined and tested” (page 7) and “for best results, the state-level data presented here should be supplemented by local analysis” (page 8).

Nevertheless, the amenities prototypical of age-targeted communities simply do not attract households with school-age children.

Based on all of the quantitative and qualitative evidence presented herein, age-targeted communities do not present the commonly perceived deleterious impacts on communities. Especially in NJ, a state that has been losing residents for years and is now being hit with residential and non-residential development projects alike that are not moving through the market, it is imperative to work with the development community to devise an equitable and feasible solution for all parties, and the current bill in the New Jersey Legislature would do just that.

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 21^st 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.