The Ryland Group is one builder that isn't swooning at the prospect of hordes of baby boomers clamoring to buy homes in age-qualified communities. The Calabasas, Calif.-based builder plans to stay on its course of pursuing entry-level and move-up customers for the foreseeable future. “We're of the opinion that the demand [for age-targeted homes] may not be as big as the demographics would suggest,” said Marya Jones, a spokesperson for the builder.

Ryland's assessment of how large the market for retirement homes will grow is definitely a minority viewpoint among builders jumping into the active-adult arena. But is that assessment wrong?

A few years ago, AARP polled its membership and found that 89 percent of respondents age 55 or older planned to remain in their current residences as long as possible. Not surprisingly, the home building industry is more favorably disposed to Del Webb's annual survey of baby boomers, which in 2003 found that 59 percent planned to relocate upon retirement, compared to 31 percent of those polled in 1999. Del Webb's data showed that 7 percent of those planning to relocate—roughly 2.4 million retiring baby boomers—are likely to move into an active-adult community.

PLENTY OF PROSPECTS: Recent studies suggest majority of boomers will relocate as they retire.
GOING MOBILE: Among baby boomers age 44-56:

Builders who are banking on retirees entering the market for new homes can find solace in an ongoing national mobility survey, cosponsored by Philadelphia-based Feinberg and Associates and conducted with focus groups of homeowners age 50 an older in Raleigh, N.C., Chicago, and Washington, D.C. In 1996, only 20 percent of the survey's respondents said they were likely to move; in 1999, that increased to more than 35 percent; and in 2003, 75 percent. “But move where?” asked Bill Slenker, a Virginia-based developer who participated in this survey. “Fiji? Outer Mongolia? The secret to active adult lies in finding who's moving where,” he says.

New Jersey, Arizona, Florida, the Carolinas, and southern California remain the hot areas for active-adult communities, with the Midwest—and particularly Chicago—emerging as the next frontier. But builders' expansion is tempered by conventional wisdom that says retirees won't stray too far from where they've lived. “It's a misnomer that people only go to Florida to retire,” said Robert Strudler, Lennar Corp.'s vice chairman [confirm title]. Customers who bought homes in Standard Pacific's active-adult community in San Clemente, Calif., mostly lived within 25 minutes of that neighborhood, said Ralph Spargo, general manager of the Irvine, Calif.-based builder's Standard Pacific Galley Communities. Joel Armstrong, senior vice president for Levitt & Sons, one of the country's oldest home builders, estimates that no more than 10 percent of all retirees ever move farther than 50 miles from where they lived.

“That's always been the case,” noted David Schreiner, corporate vice president of active adult business development for Pulte Homes, who estimated that only one-third will move beyond 100 miles from where they lived. “But what's changed has been builders' recognition of this,” he says. Pulte has more than 100 communities under development and plans to eventually have an active-adult product in all 44 markets within the 27 states where it builds in.

WCI Communities' customer base includes a sizeable number of home-grown Floridians who, as pre-retirees, start looking for a vacation or second home that eventually will become their full-time retirement residence, said this builder's senor vice president of home building, Michael Greenberg.