With nearly 5,000 sales to buyers aged 55 and older, Pulte’s Del Webb subsidiary remains the largest active adult home builder in the nation, according to a special analysis of 2009 BUILDER 100 survey results. (See "Top 10 U.S. Active Adult Builders in 2009" chart below.")
Pulte built more than twice as many active units last year as its next-closest competitor. Moreover, the Bloomfield Hills, Mich.-based company has been working to create more Del Webb communities by re-branding developments it secured through its purchase of Centex. At last count, Del Webb has more than 50 communities in 21 states.
Interestingly, the second-place finisher on our list, The Villages, with 2,115 sales in 2009, builds from a single location north of Orlando. In the last 10 years, The Villages has grown tenfold, from 8,000 residents to about 80,000. Home prices range from $150,000 to more than $1 million.
Hovnanian Enterprises, the third builder on our list, says it's the leading builder of active-adult homes in the Northeast, with 15 active-adult communities under construction or about to start in New Jersey and Pennsylvania. Hovnanian’s Four Seasons communities range from 104 to 800 units, with homes typically priced in the $200s and $300s.
Epcon Communities Franchising, the fifth-largest active adult builder, operates with a different business model than the rest. The Dublin, Ohio-based company has franchised low-rise condominium communities in more than 30 states. The communities typically contain 60 to 200 homes, with a clubhouse, pool, and sometimes other amenities as well.
Shea Homes, the seventh-largest active adult builder on our list, has been expanding its footprint. The company earlier this year bought 324 platted lots at Jubilee at Hawks Prairie, an active adult community in Lacey, Wash., for $10.5 million.
The Jubilee purchase was part of what the company dubs a “targeted national growth strategy.” Shea has spent more than $30 million in this year to acquire new communities in Las Vegas and Orlando, as well as Lacey. It purchased a 532-lot master-planned community in North Las Vegas for active adults that will be called Shea Homes at Ardiente.
In Groveland, Fla., Shea Homes has entered into a joint venture with Mountain Real Estate Capital to purchase and develop Shea Trilogy, a 750-home active adult community just west of Orlando with recreational amenities that will include tennis and basketball courts, exercise and pool facilities and a 38,000-square-foot clubhouse.
GL Homes, No. 9 on our list, recently opened a new sales center at its Valencia Reserve active adult community, where has sold about 330 homes since opening for sale in February 2009. With 16 floor plans that range from $269,000 to $512,000, the Boynton Beach community accounted for most of the company’s active adult sales activity last year.
GL expects to build 1,100 homes in this its seventh Valencia active adult community, which will include a 41,000 square foot clubhouse overlooking a lake. The clubhouse and amenity complex will span nine acres and include two pools, nine tennis courts, and a full-court basketball court.
Despite GL’s apparent success at Valencia, active adult builders face some significant headwinds. The first is that active adult purchases are discretionary, and with all the equity that potential buyers have lost in recent years—in home values and the stock market—many are deciding to stay put.
Boyce Thompson is editorial director of BUILDER magazine.
Top 10 U.S. Active Adult Builders in 2009
|Active Adult Rank||Builder||Total 2009 Sales||
Active Adult Sales
|Percentage Active Adult|
|5||Epcon Communities Franchising||859||816||95%|
|G.L. Homes of Florida Holding Co.||745||179||24%|
|10||Meritage Homes Corp.||4,039||162
Source: Builder 100 survey, company reports Active Adult Sales Update
Pulte CEO Richard Dugas told analysts on a second-quarter 2010 conference call that traffic has been up at Del Webb communities, but that sales are flat year-over-year. Active adult buyers, Dugas noted, take on average six months to buy.
They must often sell an existing home, which may mean giving up some perceived value, since home prices have declined. David Crowe, NAHB’s chief economist, points out that many active adults lost considerable wealth in the financial meltdown. They will be working longer to recapitalize themselves for retirement.
The other challenge faced by the active adult builders is catering to the demands of a changing buyer demographic with different expectations. As baby boomers move into the active adult market, they are asking for a different amenity mix to suit their more active lifestyle.
Dan O’Brien, president of Shea Homes’ Trilogy communities in Northern California, recently wrote on his blog that only about 10% of the residents of his Trilogy at the Vineyards community in Brentwood are actually retired. About 50% of the residents are still working in their careers; another 40% are starting new businesses, pursuing different career or interest paths. “These Boomers are not retiring,” says Dan. “They’re rewiring."
A recent survey done by Harris Interactive for Pulte/Del Webb, released at the IBS show in January, found that the average retirement age has been extended by about four years. The majority of 50-year-olds polled in 1996 said they planned to retire at 63. Those turning 50 today say they expect to retire around age 67.
The same survey found that boomers, who have moved around a lot during their lives, are more amenable to the idea of moving in retirement than their predecessors. About 42% of the 50-year-olds surveyed said they planned to move during retirement, up from the 36% who expected to move 15 years before. Half of those planning to move said they would relocate to another state.