Since its founding in 1986, Epcon Communities has been solely focused on the 55-plus home buyer segment. While initially serving the Silent Generation building attached, one-level homes with one-car garages, the home builder has evolved with preferences and generations, now primarily building two-bedroom ranch homes catered towards Baby Boomers and older Gen Xers. Epcon now operates 80 independent franchise builders in 28 states and ranks No. 57 on the 2024 Builder 100 list, with 1,264 closings in 2023.
Paul Hanson, president of Epcon Franchising, spoke with Builder to discuss the value of focusing on the 55-plus segment, trends and misconceptions about the market segment, as well as the short- and long-term outlook for the 55-plus market.
Why does Epcon Communities focus on the 55-plus home buying market? What value does a company see in the submarket and how has it changed over time?
We have always been laser focused on this demographic since we began in 1986 for two reasons. One, we felt there was not a lot of competition. There still isn’t today. There really aren’t any other builders doing this to the extent that we do. We find that we have been able to get really good at it over time. Through a lot of market research and feedback, develop a product line that is really popular with that demographic. The second reason is their financial situation. The Boomers today, for example, have $78 trillion in net worth. Almost double what Gen X has. Our founders have always been comfortable serving or at least tailoring the offering to that demographic knowing that they are not going to be as impacted by payments and interest rates or even fluctuations in the stock market because they have a really solid foundation and have a paid for house they are coming out of.
There has been a change, especially in the last 10 years, in terms of competition. There’s nationals that have a brand or a category of communities that they consider 55-plus. That didn’t exist 20 years ago. The nationals that do a 55-plus community are typically taking ranch homes from their existing lineup and repackaging them as a 55-plus community. We’re different because everything we do, the design starts with that buyer in mind. The homes are very unique and are laid out in accordance to what they need. It’s not a situation where we are taking from another type of community that’s a move-up or starter home and trying to repackage ranch homes into a 55-plus community.
What product types, features, and amenities resonate with the 55-plus buyer?
All of our homes start as a two-bedroom ranch. That can be scary for other builders to go to market with two-bedroom homes. We know from experience that our buyers are very comfortable, so that’s what our collection starts with. About two-thirds of the buyers leave it as a ranch. All of the homes have the option for a bonus suite [and] about a third of the buyers do that. That gives them an additional bedroom and an additional rec space. As far as the form and function of the homes, [we utilize] lots of natural light. We have a very unique design with what we call side courtyards on our homes. We put the outdoor living space on the side of the home and that has some benefits. You’re adding windows that drive natural light into the living room and kitchen areas of the house. A big theme, a lot of our messaging these days is geared toward wellness and living well in a community. We talk a lot about the lifestyle. That ties in as well to how we go to market and sell homes. How we foster close-knit lifestyles in our communities which is very important for this demographic as they are tending to transition from one life stage to another.
Does the type of land and locations for a 55-plus community differ from other new-home communities?
A lot of things transfer over [on land desires that] wouldn’t be intuitive on the surface. School districts are one. It’s just as important for us to be in a good school district as it would be for someone doing a move-up homes community. We know a lot of our buyers are purchasing so they can be close to their grandkids and they will typically want to be in the same school district as those grandkids so they are not driving a half hour to go to a soccer game on the weekends. One thing that would be a difference for us is we are not afraid of being in higher traffic areas and even in visible areas where the community is visible from the main drag or highway. We find that is because our buyers typically aren’t commuting at peak rush hour times, so they are not as worried about being further from the main drag or buried within a master plan community. They like to be out front where they can quickly get to the doctor’s office or grocery store. Another consideration, we are looking for proximity to medical offices or hospitals because that is something on some of our buyers’ minds.
How does the sales and marketing approach differ for the 55-plus buyer?
We have found that a very social approach is effective with our buyer demographic. They want to get to know the people that are going to be in the neighborhood with them. We’ll start our community launch with a series of events leading up to our reservation event. In these early events, we’re not even talking about pricing, we’re just generally describing the community. Maybe having the event at a restaurant or a golf club nearby, presenting some information on the project, some timeline of when we are going to go to market, and along the way encouraging them to bring their friends to these events and picking their neighbors. We’ve found that they really start to get close-knit from the beginning and that lifestyle is forming before the community is even on the ground. Then they start inviting more people and these events grow, culminating in this reservation where everyone decides on their home sites and we take them to contract shortly after that.
Many builders are employing more online and digital sales and marketing tools. Do these resonate with 55-plus buyers?
[55-plus buyers] are engaging quite a bit online. That is a misconception that a lot of our newer franchises come in with, thinking Boomers or older Gen Xers aren’t online as much. But, actually most of our website leads are on mobile devices. They are behaving very similarly to the way their kids or grandkids do in interacting online with us. We’ve introduced some sales and marketing tools through Higharc recently where they are able to view the homes online, or even from a mobile device, in a 3D setting. That has made a difference in our sales process to paint the picture to buyers of what they are actually going to be purchasing. Playing around with those 3D models either on their phones or in browsers gets them excited about our product and gets them to convert to sales quicker than they had been just going off two-dimensional brochures.
We’re working this year to get [3D technology] into our design studios. Right now, we do our design appointments how most builders do, there is a platform they can look into ahead of time so they can see what we offer. Then they go to the design studio and can look at physical samples. We’re working to get 3D representations of our homes where you can make your selections. That will be a design center experience, but it will be an added tool both at the design center and in advance to be able to see how everything comes together in a browser before they go to the design studio.
What does the short- and long-term demand runway look like for the 55-plus segment?
2023 was a relatively tough year. I chalk that up to the fact that as many of our buyers want to make a change and get to a point where they are downsizing, they don’t necessarily have to. A lot of them are still fairly young, especially in today’s standards. They are 62-63 and not in their 70s or 80s. This year has been very good for us so far; last month, April, was tremendous across the entire system. I’m feeling very good about the balance of 2024 and I feel that we are starting to get sales that were delayed in 2023 when there was a little more uncertainty and reticence to the interest rates and general economic conditions.
Right now, I believe our average buyer age is around 63. Every day, about 10,000 people turn 65. That’s going to continue for at least the next ten years. So, several years of this runway for us just in terms of people moving into this demographic and being ready to sell the house where they raised their family and being ready to move on to the next stage.
My personal opinion, as a geriatric Millennial, I think Millennials are going to want to be in these types of communities sooner than a Gen X buyer or Boomer buyer because we like the experience of something like a lifestyle-rich community. We typically don’t like to maintain our homes or at least the extensive amount of maintenance that is required if we’re just going to buy in a regular community somewhere else. I think a lot of Millennial buyers are going to be buying in their late 40s, early 50s. Most of our communities are age-targeted and not age-restricted. Even the ones that are age-restricted, 20% of the buyers could still be under the age of 55 and live in the community. I think the drive of millennials to socialize a lot more, value experiences over things like doing yardwork or shoveling snow, are going to push them in the direction of our communities sooner than the average age of a Boomer or Gen Xer buying in our communities.
