Transcript
Dean Wehrli:
Hi everyone. This is Dean Wehrli with the New Home Insights podcast from John Burns Research and Consulting. We’ve talked about the age qualified 55 plus sector on the show before, a couple of times, and that’s really because the demographics are just so overwhelmingly positive for this sector and that it should be a huge part of the housing landscape and it is a major part of the housing landscape, but it’s kind of a tricky space. It hasn’t been so monolithically successful as the demographic trends might imply.
In other words, you can build it, but they’re not necessarily going to walk out of the cornfield and buy your home at a 55 plus space unless you do it right. Someone who knows this space intimately and does know how to do it right, is Deborah Blake at the Ipsum Group. She’s a principal there. She started at the epicenter of the 55 plus world, right, Del Webb in Phoenix where it all came to be. And she’s been doing this ever since, advising 55 plus developers for the last 11 years at Ipsum Group. Deborah, how are you doing this morning?
Deborah Blake:
I’m doing well. I’m happy to be here. Thanks for the intro.
Dean Wehrli:
Absolutely. Well, let’s just do a little more of that. Why don’t you start us off by telling us a little bit about your background and then also what you do at the Ipsum Group and what the Ipsum Group does?
Deborah Blake:
Yeah, well, I’m based in Phoenix and I did start my career in late 1989 at Sun City West. I call this area, the stadium that Del Webb built. And so I spent 22 years with Del Webb and with the PulteGroup, and my career allowed me to be involved in all aspects of the business, started in the design center, went into sales, marketing, construction operations, community operations, a lot of startup of large communities like Anthem and Sun Cities. I was part of finding new brands for rejectors of large-scale Sun Cities, where we created small scale active adult communities like Solera. I don’t know if you remember that brand way back in the day. And I worked on Del Webb’s first country club community for all ages. So I have a lot of master plan community experience and a lot of startup, a lot of visioning.
And ultimately I was the National Del Web brand expert for Pulte. And so I traveled around the country helping operators figure out how to be successful and what they were getting themselves into and how to find new communities. And so my career really led to my decision to start the Ipsum Group. And I say that in terms that I understand my clients, I can put myself in their shoes. And I think it’s very difficult for consultants in our industry to pedal something that isn’t based in real experience and understanding. And so the Ipsum Group over the last 11 years has been about sharing everything that I’ve learned about the consumer in the category, best practices, most costly mistakes, and then also studying the consumer. And there’s a lot to study when it comes to the boomers because they are a huge population and everyone’s studying them.
Dean Wehrli:
And that was a very exhaustive list of things you’ve done. Did you also do some dry walling and maybe some light carpentry and with everything else, all those other hats?
Deborah Blake:
No, but I’ve definitely watched it happen, numerous times. So…
Dean Wehrli:
You started the Ipsum group about 11 years ago to help folks. What does that name mean? I have to ask.
Deborah Blake:
Oh, that’s a great question.
Dean Wehrli:
It’s Ipsum.
Deborah Blake:
Ipsum. It comes from the Latin phrase nosce te ipsum, which means ‘know thyself’. And so it’s a real nod to the second half of life and this consumer who’s no longer thinking about keeping up with the Joneses and really more interested in exploring themselves and being their best version of themselves. And so that’s how I came up with the Ipsum Group.
Dean Wehrli:
I like it. It sounds good. It rolls off the tongue more than nosce te ipsum.
Deborah Blake:
Yeah. Right.
Dean Wehrli:
Let’s shorten that a little bit. Let’s start with the key to all this, which is the demographics, and then we’ll move into some of the success factors of the marketing that you’re so experienced on. We’ll talk about product and land planning and segmentation, and we’ll talk about amenities in there somewhere. We’ll hit amenities and then we’ll talk a little bit more about the market and the strength of the market because there’s some questions there. So first demographics, it is kind of a given now that it seems like, tell me if I’m wrong, tell me what your experience is, that the AQ buyers, these age qualified 55 plus buyers are older than 55, for the most part. Is that true? And how is that trend moving now in terms of age of buyers?
Deborah Blake:
Right, right. Well, the new home buyer in an age restricted community is definitely not 55 on average. Are there 55 year olds? Yes. Are there 45 year olds? We can talk about the 80-20 rule in housing for older persons act, which allows you to age restrict, but let’s just keep it at, what I like to call the meat of the market. Okay.
Dean Wehrli:
Yeah.
Deborah Blake:
And that’s a really important concept here because we’re talking about a huge denominator, right? We’re talking about 78 million boomers and we have a huge opportunity to deliver homes to a market that can afford what we have to sell, that wants what we have to sell. And it’s about really understanding what the niches are within there, but we can talk about that more. So the average age is somewhere between 63 and 65 these days, and it is getting older, and it has been getting older over the last decade.
And are we surprised? No. I mean, kids aren’t leaving home. They’re going to college, they’re coming back home. We have to work longer in life. This idea of retirement, for which the Sun City concept was created, has really changed. And at a minimum for boomers, it’s getting pushed out by 10 years, this decision to make a major career move. So people who are considering an age restricted community are not moving until later. And so I have a lot of conversations with people about Gen X, “Well, what about Gen X?” And I’m like, “I’m not focused on Gen X because Gen X isn’t moving”. Really the opportunity is the boomers because 10,000 boomers a day are turning 65 until the year 2030. Let’s just deal with that population. That’s a good business. I think when we start dealing with the fringes, we lose our focus. So…
Dean Wehrli:
Is it the economics? So folks are retiring later, working longer, and that really is delaying some of that move out into a retirement community. Is there also an element though that some people just from their self-image don’t want to be in a “age-qualified or retirement community”, even when they’re retired? Is there an element of that?
Deborah Blake:
Well, that’s very interesting because I hear about that a lot, particularly among consultants in our industry. When we meet and we start talking about the business, it’s like, “No one wants to live in an age restricted community”. And I’m like, “Well, I’d love to tell you that’s true, but it’s just not”. I continue today seeing people who cannot wait to move in to this age restricted community where there’s so much to do and people like them, and so there is still a market for age restricted communities. And frankly, like I said in my introduction, I don’t think the ego is really there as much as people might think that, “I’m embarrassed to live in an age restricted community”. On the other side of the coin, I can’t tell you how many people I work with that are younger than me, in their forties, thirties saying, “I would love to live at that community. That’s amazing. I can’t believe the amenities or what they’re doing. They’re having so much fun”.
Dean Wehrli:
They want to go there early because they want to crush their opponents in pickleball because they’re like 30 years younger, I think it might have something to do with that.
Deborah Blake:
Oh, pickle ball. We got to talk about that too.
Dean Wehrli:
We’ll talk about it. We’ll for sure talk about pickleball. Let’s talk about longevity though. I mean, like you said, people are taking longer to retire, they have to work a little longer, but also people are living longer. Is that going to have an impact, that demographic of folks living longer, over time? I know Covid has kind of interrupted that trend, but the trend has definitely been for folks in the western world to live longer. Is that going to have a big impact on it’s qualified going forward?
Deborah Blake:
Longevity is the game changer, frankly. And when you look at the power of the internet and at our fingertips, whether it be a mobile phone or a laptop or an iPad of which boomers use all of them, they’re the fastest growing segment in all of those areas. We know more about impacting longevity in a positive way than we ever have. And it’s because of the boomers. They bring us along in the wake, because they’re such a huge population. So, Stanford just put out their new life map, for instance. And the new life map is basically talking about we’re all going to live to a hundred plus.
So how does it change our entire life? Because right now what we’re dealing with, with the boomers is we’re trying to cram everything we’re learning about living a longer, healthier, happier life in the last 40 years of our existence. And so Stanford’s examining how does it change, how long we’re in school? From preschool all the way through college, how our jobs, our careers, et cetera, et cetera. So that’s super interesting. And there’s studies that like Harvard is doing, the happiness study. It’s a very long-term, multiple decades study about what makes people happy. And they found out that it is friends, friendships, social interactions.
Dean Wehrli:
Social connection, social interaction.
Deborah Blake:
Yes. Guess what active adult communities have offered since day one?
Dean Wehrli:
Active adult communities can help you live longer, is a legitimate appeal.
Deborah Blake:
It’s legitimate. It is legitimate. And when we talk about wearables, everyone’s wearing your Apple Watch or your whatever, we actually can prove that living in an active adult community can help you live better and longer. So I think that’s in the works, but there’s no doubt that longevity is on the minds of our consumers, mind, body, soul and how… So there’s a lot more at stake than the consumers that Del Webb was targeting in 1960 who probably had a 15 year trajectory of living in an active adult community that he presented. So it was all about rest and relaxation and resort communities and that type of thing. It’s not about that anymore. It’s so much more.
Dean Wehrli:
Yeah, it’s like seventy is not the new 60, honestly, 80 is the new 60 I feel like.
Deborah Blake:
Honestly. And I think that’s the thing–
Dean Wehrli:
Let’s just keep pushing that.
Deborah Blake:
That’s the things that we have to look at. You talked about the ego of, “I don’t want to live in an age restricted community”. I think it’s more, “I want to be as young as I can be. I want to feel good, I want to do good, and I want to look good”. That’s the boomers MO. And so how do you deliver on that with a community?
Dean Wehrli:
I think with motorcycles and a lot of tattoos, I feel like is–
Deborah Blake:
Oh, motorcycles, see, I was thinking Botox and a lot of wine drinking with friends.
Dean Wehrli:
You know what? That’s fair.
Dean Wehrli:
Let’s talk about some of the key success factors in building a good AQ community, age qualified community. And the first question, let’s sort of transition from demographics and ask you this. Is it all about appealing to boomers? I think the answer is going to be yes, but it’s all about boomers right now, and that’s going to carry through for at least the next decade or so?
Deborah Blake:
I mean, I think the primary focus right now is boomers. I think this is the segment, the population that’s really moving the needle. And so I think that it is important to focus on your boomer consumer. So I mean, simply put 60 plus, who is your niche? I think you will get the fringes right? You will find Gen Xers that want to move into that community. Frankly, I don’t think they’re that much different when you get it right, because in my three decades, I really have seen a lot of things that have stayed the same relative to this customer. And I have seen things change, but it’s more in terms of intensity of what the boomers are expecting. For an example, wellness, we just talked about longevity. So I have clients that are now partnering with large healthcare organizations to provide expert delivery of proactive wellness programs within the community and even exclusive access to doctors, RX programs.
We do a thing… We have a concept called the wellness suite that we put in small communities, and it’s basically a multipurpose massage room. And what it allows the homeowner’s association to do is to attract contractors from all over the area and allow them to use this room to deliver their services. And then the HOA can take a rental fee, if you will, or a percentage of the fees and put that back into the HOA budget. It allows the boomer consumer who wants to have everything from physical therapy to massage therapy to, like I said, Botox parties to facials, whatever you want to do, but it can happen in that room. So it’s about, now thinking about what is the physical amenities that you need to build so that boomers can get what they want and how can you execute that in a cost-effective manner? And then who are the experts around the area that can make the overall service better?
Dean Wehrli:
Okay, so it’s kind of this idea that you have the boomers, you have these critical fundamentals, but those fundamentals apply to any demographic. Are you still though… You still have to be attuned to those subtle differences though, as you have even different cohorts, even different five, 10 year cohorts, you’re still keeping on very, very much current trends as well too?
Deborah Blake:
Oh yeah. I mean, this is current. I think. So the first thing I’ll say is now more than ever, consumer research is key. Primary consumer research is critical. So in our industry, as you know, we do a lot of market studies and that is looking in the rear view mirror, if you will, what’s sold, what’s popular, what amenities are on the ground, what’s the bestselling plans, what does the demand look like in your area? What are your key feeder markets? But now if you really need to understand who you’re highest and best consumers, where are they coming from? Maybe it’s just local. And I do think local is the new big opportunity. I know we’ll talk about it later, but consumer research is critical because you need to not only know who your customer is, what they want to do, but what are they willing to pay for it.
So if you really want to, it’s micro niching. It’s about, I can’t just say I’m active adult, I need to figure out how I’m going to compete. And to that end, when we look at the large destination, historical active adult markets like Phoenix and all of Florida, which is primarily a naturally occurring retirement community, I call them a Newark because a lot of those communities aren’t age restricted, they’re age targeted. And then you’ve got The Villages which is age restricted and you’ve got large Sun Cities. But what’s important there, is that if you’re thinking about entering one of those highly saturated markets, you need to understand your resale competitors as much as you need to understand new home competitors, because the active adult communities are aging very well, we thought they were going to smell a little bit like death and mothballs, but they don’t.
And they don’t, because you have retired executives and people who understand how to protect their real estate investment. And so they’re boards of directors and residents are very involved in making sure that the community ages well, and they also have the reserves to update amenities over time. So a great example, you’ve brought up pickleball a couple times. I remember when one of the large Sun Cities took eight tennis courts and converted them into 32 pickleball courts. And that’s just about staying on trend, making sure that you’re going to appeal to the younger consumer coming in. And by the way, their homes are meticulously cared for. They’re typically a wider type of lot and less expensive. Now, the market right now is a little weird, and we know resale and new is coming closer and closer. But generally speaking…
Dean Wehrli:
Let’s talk about that, Deborah. So you mentioned that the origination point where they’re coming from is important, but also what they’re coming from, and they’re pretty much always coming from an existing house. How do you differentiate an age qualified community to compete with just simply aging in place, which is always going to be a cheaper alternative?
Deborah Blake:
Well, it’s interesting, maybe not. And I don’t think it’s all about the home. It’s about everything that we’ve talked about. So first of all, I will say that yes, most everyone who’s moving into an age restricted community is coming from a home that they own. They have very strong equity positions. Sometimes they own it outright. They’ve lived in it for decades. It just depends on where they’re coming from. But they’re definitely downsizing and they are taking equity from their existing home and they’re investing it in their new home.
So what drives them to move out of their home into the new home? And I think it’s, first of all, the old home is potentially multi stories. It could be two stories. It could be two stories with a basement, it’s aging, it’s 20, 30 years old, and it needs a lot of work. It requires a lot of maintenance. It might be on a large property, and that is becoming untenable. In addition, the kids have moved out and there are rooms that we’re not even walking into, let alone using. And so it’s really important for the active adult community to communicate to and educate their future resident on how much better it is to live in a single story home, an open floor plan with bright shiny spaces and lots of windows and a big back patio and low maintenance and brand new shiny stuff with a warranty.
And let them understand now that this is the freedom phase of life that they’re looking at. That’s really what it is. And they want to live independently as long as possible. And so it’s really important to present… To design homes that allow that. So we’ve talked a lot about universal design. It’s not ADA, but it is about people being able to live as long as they can in this home. They don’t want to go to assisted living.
Dean Wehrli:
So you’re going to supply them with a home that meets their needs, but also that social interaction that they may not get in the existing neighborhood, their kids have moved away, what have you.
Deborah Blake:
Yeah, I mean, they’re feeling more isolated in their old neighborhood. Their neighborhood has changed. Now they move into a community where everything’s in their backyard. I call it, where it’s easy to be, well. Where it’s easy to be happy. Where it’s easy to meet friends on the street. That is what this community offers.
Dean Wehrli:
So in the for-sale world, we know that still aging in place is definitely an alternative to a 55 plus community. Have you thought about rental and specifically bill to rent? I was doing a panel just literally yesterday and a major, major, major multi-family developer mentioned that a huge chunk of their BTR, their built-to-rent single family rental homes were going to retirees. Do you see that as a major competition?
Deborah Blake:
I don’t see it as a major competition. I see it as an opportunity. Both will exist together. So I was just having the same conversation. So a couple of things. One is, we have seen boomers renting by choice and not buying, for numerous reasons. And we know that in large active adult communities for many years, there are individuals renting their homes. I mean, that just happens, right? But now we’ve got institutional investors and now we’ve got built to rent communities. And this built to rent concept is growing so fast that it only makes sense that for the same reason that you want an age restricted community, you want an age restricted BTR community. So I am seeing that growing as well. I was just having a conversation with a client yesterday, and I know of a couple of developers that are getting into it.
Dean Wehrli:
So we might have… Which is true in the non-restricted world, where a masterplan that has let’s say eight neighborhoods, one of those might be a BTR neighborhood. Do you see that same thing happening in age qualified communities, master plans?
Deborah Blake:
So I do think that master plan communities in the markets where they are prevalent, we will continue to see age restricted pods, communities for sale, and I think communities to rent. I think that that makes perfect sense. So I think that we’ll continue to see that to grow. I also think that there are opportunities like what we saw at Victory at Verrado, which was the Ipsum Group’s first client in 2012, and this was the first active adult master plan within a master plan because it had multiple builders. So broad segmentation, multiple builders, all age restricted within the larger Verrado master plan, which is for all ages. Rancho Mission Viejo is another great example of that.
The Gavilan brand, which is age restricted, is found throughout the community and it’s taken shape as gated community within a community with multiple lot sizes, to smaller neighborhoods that just look like any other neighborhood, but they’re age restricted. And so I think we’re going to see more of those types of new community opportunities coming together that allow developers and builders to continue to have that mutually beneficial relationship where the developer can bring their place making creativity and expertise, and the builders can get a true age restricted segment in their portfolio that they couldn’t afford otherwise.
Dean Wehrli:
Let’s talk about some things on the negative side that is, what are the biggest mistakes? And don’t name names, or you can name names. Let’s go for it. What are the biggest mistakes that you see being made or at least considered when folks are designing an age qualified community in whatever terms, the community, the amenities, the product, what have you.
Deborah Blake:
Right, right. Okay. The biggest mistake I see, and I’ll put it in the category of the most costly mistake, is a bad land plan. So I would… Two points to describe that. One is that we do a very dense back to back type of lotting. Not a lot of open space, not a lot of premium opportunity. And even the widths of the lots are starting too narrow. This customer wants a wider shallower type of product, and they’re willing generally to pay a premium to that. So I always say if you’re doing single family, don’t do a home that’s narrower than 40 feet. It’s very difficult to get a two car garage and a nice entry that the customer expects. And so don’t do that.
Dean Wehrli:
Yeah, even 40 sometimes feels a little squeezed. I would do 55 by 75 or something like that over 40 by 100.
Deborah Blake:
Yeah, I mean, I’m just saying, I mean, agree. I think the wider, the better. Honestly, if you look at go back in time, mostly it was 50’s, 60’s and 70’s, that was the width of the product. But over time, obviously we’re trying to get more density. We got to pay for those amenities. And so we are trying to cheap out on the plan without looking at the revenue, the upside revenue opportunity. So this customer wants what they want. It’s like I said earlier, they are taking equity from their existing home and investing it in this new home. And so they still only need two bedrooms and a den, which is the primary configuration, but they want all the goodies and they really would like to have privacy and a view. So a shorter backyard, but with a view of open space. So it used to be golf course. Now it might be just open space and a trail system or a lake, but open space will get you higher premiums than it would in the conventional side of things. And it will actually help you sell homes overall because they want what they want.
Dean Wehrli:
So price and absorption, sales velocity are going to be aided by that.
Deborah Blake:
Both are going to be impacted by it. And if you look at some of the bestselling communities, and you all just did a nice article about latitude, Margaritaville, we’re all very familiar with it. Go study their land plans. They start in the early phases with almost every home backing on open space or water. And then as they get deeper into the community and prices are going up, they bring in this cottage product that’s back to back and allows the price point to come down, and then they can look at offering more of those options that are trade-offs just to get into this community with all of these amenities and all this lifestyle. So I think that’s something… It’s just a missed opportunity. And the other thing that I think is a missed opportunity is really thinking about how important it is for this customer to feel proud of where they live.
And so that marketing trail, the front entry, the arrival experience, you can’t have homes on that. You got to have some landscape buffer. So study the best. And you’ll see they all do it the same way. And even in a small community, you just got to carve out some landscaping buffer on your marketing window, on your marketing trail, where your amenity core is, because even if you have higher density in the neighborhoods, you can get away with that. If you offer that, if there’s the perception that there is more open space, it’s green, it’s got paths, and all of that stuff is on the entry and the marketing trail. So that is really important to think about. And I think the sense of security is really important. And depending on your market, gated may be the only way to deliver that, but in many markets it’s just about creating that threshold, that sense of you’re coming into this community and it feels like it’s separate. And then of course you have friends and neighbors who watch out for you all the time. So you get that sense of security from that as well.
Dean Wehrli:
Does the gating matter in terms of where your location, like you mentioned, I love the idea of having 55 plus, seven or 800 homes at 55 plus within a larger family oriented master plan. I think that’s almost always a winner. Would you gate that more than you would though an age qualified community that’s completely on its own? Just because they want to have that sense of security since they’re within a larger master plan?
Deborah Blake:
I think if you can gate, gate.
Dean Wehrli:
Oh, really? Okay.
Deborah Blake:
And I think that it comes down to, it does check off all the boxes, which is it gives you that sense of security. It keeps the wild kids out that might be in the neighborhood. It reduces traffic. I mean vehicular traffic, pedestrian traffic. So I think when you can gate, gate, but I will also tell you that there is this concept with the active adult consumer, which I call total cost of ownership. And the total cost of ownership is this idea that the price of the home and the law premium and all the upgrades, they’ll go crazy on that and they’ll spend way more than what it may even appraise for. They’re not concerned and take advantage of that because that is a great revenue generation rating opportunity. But if your property taxes are too high, your HOA fees are too high, utilities are too high, those monthly costs, they’re much more sensitive to those. So those could be the deal breaker over the price of the home and options and lot premiums.
Dean Wehrli:
I have an opinion on this, but I could be wrong, and I want to hear what your answers for this, but if you had to fudge toward raising the HOA or raising the tax rate, which direction would you advise?
Deborah Blake:
I don’t think, I mean, we all know about CFDs and we’re using those to deliver amenities.
Dean Wehrli:
That’s what I mean, yeah, CFD. I’ll tell you what my bias is, that you would rather raise that CFD a little bit and raise that tax rate and keep that HOA to a minimum. I think the HOA is just, honestly, it’s just easier to calculate. It goes right to your monthly payment. It sometimes can be a hot button issue with a lot of these folks, these retiree buyers. I would fudge toward raising that CFD and keeping that HOA as low as you can.
Deborah Blake:
Yeah, it definitely is. I do think keeping the HOA as low as you can, but I think you have to look at both of those costs. Because I tell you, the more business I do in California, depending on where you are, it’s a real challenge. But most people are coming from–
Dean Wehrli:
How about Texas where it could be 2.5, 3.0 and higher.
Deborah Blake:
Right. So I think it just depends. And I think we had the discussion prepping for this. At some point you also need to think about, “Should I even do active adults here?” Maybe it’s just better for this piece of dirt to do a conventional play or an age targeted play or something like that. So I think that, and I always talk to my clients about this, if I get in early enough, is to say, what’s the highest and best return for that dirt? And sometimes it just doesn’t work.
Dean Wehrli:
I like that. So you’re an age qualified consultant who says sometimes, you know what, don’t do it.
Deborah Blake:
I wouldn’t do it. Yeah. Oh, and if the land plan’s wrong or if the product’s wrong, or, I mean, I will give it to you straight. At the end of the day–
Dean Wehrli:
Let’s do that then. Let’s first talk a little bit more about land planning that you mentioned about how things like back-to-back lots and open space. Let’s talk a little bit about that and then we’ll circle back to amenities. So first in land planning, product segmentation. By the way, just for our listeners too, when Deborah and I are saying product, we mean the type of lot, usually a lot type or something along those lines, like 5,000 square foot.
Deborah Blake:
And I put homes in that too. I put–
Dean Wehrli:
Yes and homes. And so product also means home. The type of floor plans, things like that. Segmentation is this idea that you want, like you said, you’re 40 wide, you’re 50 wide, you’re 60 wide, et cetera. And those different, and they all have their own set of floor plans. A lot of active adult developers call them series or something like that. So when you’re designing, when you’re consulting on designing that product, designing that segmentation, what are your hot buttons? What are the things that you want to make sure they get right?
Deborah Blake:
Product and segmentation can be a little tricky in active adults. So I think that’s the first thing I want to say about it because it is a two bedroom den, single story home primarily. And so it’s not about more bedroom count, it’s about the home designs getting wider and the spaces where the owners spend time being more luxurious and amenitized. I think that we can go into it deeper, but I think that’s most important. And one example is we tell people that for every a hundred square feet of living space, you should have 10 linear feet of master bedroom hanging and 10 linear feet of cabinets and countertops in your kitchen. That’s a really interesting point to think about because it really speaks to, we’re not talking about bedroom count, we’re talking about the spaces getting more amenitized and luxurious.
Dean Wehrli:
Deborah, let’s circle back to amenities. We covered that a little bit. We talked about, for instance, the partnership with healthcare providers. Let’s do some quick hits though on just what are those key amenities? We know pickleball is, we can leave that as a given, but do you think about–
Deborah Blake:
No, it’s not a given.
Dean Wehrli:
No. It’s not. Oh my God. Okay. Tell us that first.
Deborah Blake:
It’s very interesting. Yeah. I have a small community and it’s infill and it’s in the middle of the country, and we have decided to forego pickleball because of the growing news that we’re reading about the nuisance factor.
Dean Wehrli:
The sound, right?
Deborah Blake:
And HOAs are getting sued. Their residents are unhappy. And it is true. It is a loud whack, whack, whack. And so always in the large scale communities, we put it away from residential, we try to get it in the amenity core, but when you start getting into smaller settings, you really got to think about that. So we are probably not going to put a pickleball court in.
Dean Wehrli:
That’s interesting. And you know what? Yeah. Now that you mentioned it, I’ve seen this couple of stories that say neighbors getting furious at the whack, whack, whack of pickleball. That’s interesting.
Deborah Blake:
Right?
Dean Wehrli:
Okay. So pickleball’s not a given. How about looking into your crystal ball? What is the next pickleball that just kind of comes out of nowhere and becomes, for the most part, this really almost necessary amenity?
Deborah Blake:
Well, may I just take it with a little different angle and coming back to the consumer and what we know about the psychographic and all of the research that we do, and we do a lot of it. I work with ProMatura quite a bit doing consumer research, and here’s what we continue to see. Social and gathering place is number one. Number one. And so I look at amenity functions as priorities based on the size of the community and the budget. So sometimes you have a very small community. You got to have a place where people can get together and drink and have fun together. So that’s number one. Fitness is number two. That’s a combination of group classes, a place that’s large enough that’s like flex space where you can have group exercise classes. I say in active adult communities, everything’s more fun when you do it with friends.
And so we find that that is a real driver, but we’re also seeing a real understanding and appreciation and a new context for fitness centers for our customers because they’ve been members of Lifetime or whatever, and now they’re going to give that up and they’re going to move to this community. So they want free weights, they want some cardio machines, and they want some TRX bands and things like that. So they’re much more knowledgeable of what they want in their fitness center.
And so we use experts to help us fit whatever the size of your fitness space is to make sure you get the right equipment in there, you get the free weights, that type of thing. And I think when you’re in four season climates and you think about that long winter, how do you make sure that people have a place to go where they can be active and gather with friends? And I have a community in Crown Community Development doing their first active adult community in Gettysburg. It’s called Amble Brook. It’s a large scale community, 2,500 plus units, large scale amenities. They have indoor pickleball and multi-use courts.
Dean Wehrli:
Gettysburg, Pennsylvania? Pennsylvania, that Gettysburg?
Deborah Blake:
Pennsylvania. Yep, Gettysburg. So I think you want to think about the long winters and how to make sure people can come together. And then outdoors walking paths, number one, the community needs to be walkable. It needs to be connected. It’s ideally connected to a greater path system within the town or the county that it’s located and the neighborhoods are connected. So think about that in terms of how you locate your amenity and making sure that people can walk where they want to go. And then the other thing that we continue to see is people want a pool even in a four season climate where you got to shut it down and it snows. But they want a pool. They want to be able to hang out with the grandkids and maybe do a lap or two, but it doesn’t need to be big. But they really want a pool.
Dean Wehrli:
So in terms of those amenities, those are the key ones, and those are really those fundamental ones. Going back, I don’t want to belabor pickleball, but pickleball was one of those things that seemed to kind of come out of nowhere. So maybe the solution is just you have to be nimble enough to take advantage of and to provide whatever that next pickleball is.
Deborah Blake:
Right. Right. And a couple things on amenities I think you got to think about is, what about the lifestyle director? Because I hear a lot about people don’t want to lifestyle director. This isn’t Julie on the Love Boat. But what we do find is that actually the larger the community and the deeper you get into the boomers, you realize that they need help doing what they want to do. And sometimes they don’t even know what they want to do. Read the book by Joe Coughlin called The Longevity Economy, and there’s a part, and this is all about the boomers, and what he talks about is, that these boomers are the most educated, group to ever go through this stage and the most experienced. And so they want to do great things, but they don’t know how to do it. And so think about as a lifestyle director, it’s not about scheduling rooms or getting people to play cards, it’s about getting people connected with volunteering opportunities or lifelong learning at the university or travel tourism or travel volunteerism. It’s about taking it to a whole new level.
Dean Wehrli:
It’s about thinking – is it fair to say it’s about thinking of ways to make sure these folks who again, by definition are retired for the most part, have something to do with now having a lot more time on their hands.
Deborah Blake:
And something meaningful to do because they’re re-careering, starting second careers, they’re working part-time, but they want to give back, but they don’t want to just hold babies in the nursery. They want to reorganize nonprofits. They want to bring their experience in education to really bear on the world on the greater community. And so like I said, the stakes are a lot higher for this, for an active adult community today than they were. And on that theme, fee for service is a new trend that we’re seeing in active adult communities. And this is to keep HOA fees low, right? People only want to pay for what they use. So when you think about designing the community of the amenities operating the amenities, think about keeping your HOA operations low. But on the other hand, you’ve never had a consumer that has higher expectations than the boomers.
And so when they’re really into something like cooking, for instance, they want the best facility. They want to bring chefs in, they want to really dig in, but they’re willing to pay a hundred dollars for that chef to come in and do a meal and a wine tasting, and that will sell out in no time. You got 20 tickets, but you’re really appealing to the passionate foodie, and that’s what you’re seeing now. So you can’t have this diluted lifestyle, I call it. You’re going to do an art studio, make sure you got the right space, and then bring the artist in residence and charge a fee for the class and have travel groups, and obviously you pay for that. And so it’s about keeping HOA fees low and offering a fee for service so you can pump up the quality of the lifestyle.
Dean Wehrli:
Let’s wrap up amenities with my favorite, actually least favorite amenity. Is golf dead or do I just want it to be?
Deborah Blake:
Golf saw resurgence during Covid and I think–
Dean Wehrli:
Yes, I’m aware of that painfully, sorry.
Deborah Blake:
Yes, that’s right. And I think it was because golf courses were in large scale active adult communities, and these people wanted to continue to get together and that was the place that they could do it, was on the golf course. So I think that was the reason. I think it just depends, honestly, I don’t have a pat answer for that. Again, it depends on your market. I do know that they’re expensive to build, they’re expensive to maintain. So is there another way to deliver meaningful open space that’s good for everyone and thinking about the entire community instead of just the golfers.
Dean Wehrli:
And you can’t do that as a fee for service. You see that very often where there is a higher rate trade for if you want to be a golf member. But if you’re going to do that, you still have to devote so much space and expense to doing it. It’s a huge amenity and if it doesn’t pay off, it’s a mistake.
Deborah Blake:
Yes. And I think there are versions, we’re seeing par three 18 hole golf courses. I have a client who did a nine hole and is making it more of a park setting and providing more access to the residents during play and after play, because usually the golf courses is like stay off because we got to maintain the greens and all that. So I think there are new ways to make golf work in this time, but again, I think it’s about what other places can you golf where your community is located, because we see that too.
Dean Wehrli:
Okay. Let’s end with a couple of questions. One of which is something that has actually been a concern to me a lot when we do advise on active develop communities, which is quite often, and you mentioned just a little while ago that these almost sort of concierge doctors and these kinds of things that folks are ready to pay for and there’s a lot of affluence in the boomer generation, but are we pitching too much active adult at relatively high price points? And I know I’m in California, so I may be a little biased there because our price points are high everywhere. But is there a concern? Do you have any concern that we are sort of pitching and we are forgetting those folks who have a little bit more modest means in the AQ space?
Deborah Blake:
I do think that there is a best odds plan. And the best odds plan for active adult is to really find the affordable meat of the market where you’re really getting after those that are retiring. We see a lot of civil servants who have pensions and retired teachers, cops or just retiring from corporations where they have a pension and that type of thing. That’s going to change over time. But I think that when you look at active adult, it tends to be more blue collar, pink collar type of person. That being said, there are locations where if it’s still downsizing, you still have a great feeder market. I’ll use Rancho Mission Viejo as a great example. Those homes are expensive, relatively speaking for active adult, but their feeder market, their buyers are coming from homes that are multiple millions of dollars. So, relatively speaking, it’s still downsizing. And I do think that the more affluent the customer, the more options for that customer. And I find more affluent age targeted, not age restricted.
Dean Wehrli:
So for our listeners that’s in Orange County, California in Southern California, a highly affluent market where they are bringing massive equity in there. In most markets, they’re not going to have that kind of equity. I know I don’t want to harp on it, but I am concerned. So I do think I have seen, I won’t name places, some struggles, and I think one of the reasons was that they were pitched at such a high price point. They really kind of narrowed their buyer pool, I think, more dramatically than they thought they would.
Deborah Blake:
Definitely. And so I think that you have to go back to the consumer and look at the market and make sure it’s still downsizing. They’re still selling a home, they’re taking some portion of it to buy this home. They’re putting the rest of it in the bank. That’s the ideal situation. Right?
Dean Wehrli:
Yep. Let’s end, Deborah, with the crystal ball. I do that a lot here on the show, so it could be anything you want. Honestly. I was going to say, what’s kind of the next big thing, product amenities, locations, anything you want. What do you see as something that’s going to hit with the AQ space here in the near term?
Deborah Blake:
I don’t think it’s a big thing. I think it’s a bunch of small things. So what I mean by that is I think we’re going to see more diversity in age targeted age qualified housing that boomers want. I think we’re going to find there’s a huge opportunity in the center of the country where there are no active adult communities, where people don’t even know what an active adult community is and think their next step is senior living and they’re languishing in their home because there’s no option to move to an active adult community where you can really thrive at 65. So I think that’s an opportunity. We talked about built to rent. I think built to rent is going to grow. I think we’re going to see more age restricted options for built to rent, and I think we’re going to see them all over the place, because that segment’s not going away.
And so I think just as we handle conventional housing, we’re going to provide active adult options in that as well. And the other thing I mentioned earlier is these multi-segmented, large scale active adult master plan communities. And I think that that’s a huge opportunity in the right markets because what I know from the guys over at fiftyfiveplaces.com is that when they look at visitors and traffic to their website, a lot of people are looking for those large scale communities because they get more amenities.
So how do you serve that market? And I think great developer and great home builders can come together and provide the broad segmentation, the breadth of amenities, and do it with all of the things that I’ve been talking about today that really get boomers to go, “I got to live there”, and offer that. So I think that diversity is what we’re going to continue to see in this segment, and we can’t just talk about, I’m going to get into active adult. I think we need to focus on, I’m going to get my fair share and more of this lucrative segment called the Boomers and how can I do it?
Dean Wehrli:
That’s great. That’s awesome. It’s interesting you say that because actually I think I’ve noticed that there’s been some really successful communities that aren’t gigantic. There’s 650 or 750 total homes with a good amenity package, but you’re saying there’s still some space there for those really large, there’s 2000, 3000, 4,000 square foot. I’m sorry, units.
Deborah Blake:
Yeah, I’m watching it today with a couple of clients. And I think that with what we know about what this consumer segment wants and the diversity within the segment, I think that developers can really bring their expertise and their creativity and their vision to place making and make it age restricted and help builders have a meaningful segment in their portfolio for age restricted housing.
Dean Wehrli:
Awesome. Deborah, thank you so much, a ton. We covered a lot in this and I had more, but we covered a ton here, and I really appreciate you helping us do that.
Deborah Blake:
Thank you for inviting me. It was really fun. And I agree, we just scratched the surface.
Dean Wehrli:
Yeah. Honestly, I’m not making that up. I have lots of questions I would love to have asked, but there’s so much to this space and it’s going to be a big part of the future as well. Appreciate you coming on, Deborah. This has been Dean Wehrli with the New Home Insights Podcast. We’ll see you again in a couple of weeks.
