There’s always a discussion when an active adult oriented community is planned as to whether it should be age restricted (55+ only) or age targeted. One argument holds that an age restricted community is still preferred by older buyers, who simply don’t want children permanently in their neighborhood. This will attract enough buyers to meet the absorptions expected by the builder, so the argument goes. The other argument is that with careful planning of the community and the right product, you’ll get buyers of all ages, including the active adult purchaser. Both are probably winning strategies as there are many success stories for each type, but there’s no question that the age-restricted active adult community is still popular.

The Villages, an age-restricted active adult community in Central Florida, was once again the top selling community in America in 2013, with 3,419 sales. That’s more than twice that of Irvine Ranch, the second place finisher. The Villages has held this top spot for several years in a row. It is a massive master planned community that has been selling homes for over 30 years. There are 32 executive golf courses, eleven championship golf courses with clubhouses, a town center, ten regional recreation centers, and 50 neighborhood pools. That’s just a partial list of the attractions that can be found at the Villages.

The active adult communities in South Florida are also successful, if not on the scale of the Villages. WCI’s Pelican Preserve in Fort Myers, Del Webb at Ave Maria, and GL Homes’ Valencia Reserve in Boynton Beach are all market sales leaders as surveyed by Metrostudy. Ansca Homes’ Villaggio Reserve, which opened this year in Delray Beach, has reported over 100 sales in just its first three months. AV Homes’ active adult section of Tradition in St. Lucie County is the market leader, with over 100 starts in the past 12 months. That’s almost one-third of all starts within master planned communities in St. Lucie County.

If a builder can sell 3,500 active adult homes in rural Central Florida, why can’t it be done on the Treasure Coast of Florida? The Treasure Coast (Indian River, St. Lucie, and Martin Counties) have always been where retirees want to live. These counties are relatively sparsely populated by South Florida standards, but have enough infrastructure, warm weather, and nice beaches to be considered a desirable place to retire. And perhaps most importantly to builders, Indian River and St. Lucie county land is plentiful and cheap; again by South Florida metrics.

Of course, the active adult community concept does come with a price. The land purchase needs to be large enough to build at least 1,000 homes, as the common area improvement costs are higher and need a bigger denominator to allocate those costs to. And the cash flow is brutally negative at first, as these common area improvements need to be built up-front for the most part. Don’t try to tell a retiree that the clubhouse won’t be built for five years!

The payoff is big, however, especially in the referral rate. If the first buyers (known as pioneers) like the development, they’ll tell their friends, and so on, so that the referral rate can climb to 50% of all sales. Referrals, of course, are the least expensive of all marketing costs, at zero.

The Treasure Coast appears to be one of the best kept secrets when it comes to locating a spot for an active adult community. There’s no reason the area shouldn’t be able to support at least a few hundred active adult housing starts per year. So, it should be really only a matter of time before a builder decides to move north out of land constrained and expensive Broward or Palm Beach counties and heads just a bit north, because, to paraphrase Willie Sutton – that's where the land is!

For more South Florida housing market insight from Metrostudy regional director David Cobb, view his overview from the 2014 Housing Leadership Summit here:

Learn more about markets featured in this article: Cape Coral, FL, Naples, FL, Port St. Lucie, FL, Orlando, FL.