Posted in Central Florida Market, Jacksonville Market, Naples - Ft. Myers Market, Naples Condo Market, National Housing Market, Sarasota - Bradenton Market, Sarasota Condo Market, South Florida Condo Market, South Florida Market, Tampa Market | Posted on 01-02-2013 | Written by Bob Hamilton
Active adult, or “age-targeted” housing has been a major driver in new home development in Florida for decades. Retirees, mostly from the Northeast and Midwest, have historically migrated to the east and west coasts of Florida due to affordable housing, low taxes and favorable climate. Many of these retirees have been attracted to over-55 age restricted communities that have their own dedicated amenities tailored towards older residents.
However, events over the past decade have changed migration patterns into the state. Escalating home prices and lingering impacts from a number of major hurricanes originally caused migration trends to reverse starting around 2005. Additionally, the deep national recession further limited migration into the state over the latter half of the decade. A generational shift from the “Greatest” generation to the “Baby “Boomers” has also had a significant impact on migration, not only for Florida, but throughout the country.
To what extent have retiree migration trends changed in Florida over the past decade?
Richard Johnson, director of retirement policy research at The Urban Institute, states in a recent article entitled “The Shifting Retiree Migration,” that in 1990, more than one in four retirees age 55 to 65 that relocated across state lines moved to Florida, and that seven of the top 10 cities for migrating retirees were located in Florida. Over the past five years, however, Johnson’s analysis indicates that while Florida is still the most popular destination for relocating retirees, it attracted only one in seven of those age 55 to 65 who crossed state lines between 2005 and 2010. Only three metros in the state now rank among the nation’s top 10 magnets for retirees, with retiree demand shifting to cities such as Phoenix, Atlanta, Las Vegas, and Dallas, as well as other fast-growing metros in the Sunbelt. Even northern cities like New York, Washington DC, and Chicago have retained a greater share of their retirees driven by recent economic conditions or changing generational preferences.
Has this recent loss in retiree market share impacted new single family age targeted housing demand? An analysis of Metrostudy’s annual closings data within age targeted communities seems to corroborate these findings in some Florida markets. Closings for new age targeted product within the Sarasota-Bradenton market accounted for over 36% of all single family closings in 2000. By 3Q 2012, only 10.7% of all annual closings were within retiree communities. Demand for age targeted communities in the Naples-Ft. Myers market, which once had a nearly 34% market share, currently only accounts for 3.2% of all single family closings. Statewide (all Metrostudy markets combined), age targeted market share has declined slightly since 2000, from 17.7% market share in 2000 to 15.2% annually in 3Q 2012.
Not all markets, however, have experienced a decline. Age targeted demand in Metrostudy’s Central Florida market has increased over the past two years and now accounts for over 29% of all annual closings, up from 18% in 2000. Single family age targeted demand has also increased in the Jacksonville market, with 4.3% market share in 3Q 2012, up from .3% in 2000.
Ratio of Annual Single Family Closings within Active Adult Communities vs. All Communities by Florida Market
Given these recent trends, what lies ahead for new, single family, age targeted development in Florida? Projections produced by the Florida Office of Economic and Demographic Research show a 29% increase in population for those residents aged 55 and up by 2020. This is well above the 11% increase projected for all age groups, and indicates that older buyers will remain a significant market segment within the state over the coming years.
Retiring Baby Boomers are generally more active than their predecessor, and tend to desire an area that appeals to their varied lifestyle. Traditional retiree markets are therefore not expected to be a major destination for this segment, with these buyers instead gravitating towards new emerging markets in central Florida and Jacksonville. This trend has so far been corroborated by each these market’s age-targeted closings activity over the past decade. Price will also be a major factor, with markets having a low land basis likely outperforming those with higher land costs.
Despite these generational changes, there will be a place for age-targeted development in Florida over the coming years, especially as builders market communities that appeal specifically to the Boomer lifestyle. Sales activity at most active age-targeted communities has improved throughout the state over the past year, and there remains enough lot supply to account for near-term demand in most markets, with approximately 18,792 vacant developed lots and 90,220 future lots designated for age targeted development. This improvement in demand, combined with expected over-55 population growth, should allow for stable age-targeted market share over time, even with changing buyer preferences.