Builders have long known the benefits of age-restricted communities. Such developments are easier to get approved by governmental agencies, largely because they’re viewed as less of a drain on local services than all-age neighborhoods; they don’t add any children to the school system, and the impact on traffic tends to be lower.
When the housing market was booming, age-restricted communities made business sense for builders, too. Most of the buyers owned their homes outright and had seen the value of those properties skyrocket. They could sell quickly and pay cash for their new homes.
Now, those buyers are stuck, unable to sell their current homes--or unwilling to do so at current home prices. As a result, builders who won government approvals based on restrictions that said at least one occupant of each unit would be at 55 years old now have projects that are dead in the water.
Some builders are trying to get relief from the restrictions so they can jump-start sales. Kalian Companies, a Red Bank, N.J.-based builder/developer, spent nearly a year working on revising the plans for Carriage Park at Bound Brook, a 144-unit condominium project in the town of Bound Brook. “When we bought it, we didn’t even think about not going age-restricted,” says company president Mazin Patrick Kalian. “Every project in New Jersey was getting approved age-restricted because the schools in New Jersey were so backed up.”
The two-bedroom, two-bath units, with garages and elevator service, ranged from 1,500 square feet to 1,650 square feet. Initial pricing was about $430,000. The project stalled, though, and Kalian Companies had no contracts to purchase any of units. “We had pre-sales, and no one showed up,” Kalian says.
Located just a mile from a commuter train station to New York City and within walking distance of a shopping center with a major grocery store, Carriage Park at Bound Brook was a perfect candidate for re-marketing to first-time home buyers.
But before Kalian Companies even approached the township about a new approval, it performed a fiscal impact study for the type of units that were being proposed. “We really did our homework,” Kalian says. “Before we approached the town, we wanted to make sure the taxes coming in would be the same and not lower.”
The revised project was approved last week, Kalian says, with a site plan that eliminated a clubhouse and a shuffleboard court that would have appealed to seniors; instead, it agreed to build a small indoor basketball court at a nearby township park. It also agreed to contribute funds for the anticipated impact on police and emergency medical services the project would generate.
“That’s all we had to do,” Kalian says. “All the way around, it was a great deal for everyone. … I think the market will be a lot deeper for first-time, second-time home buyers than age-restricted.”
Pricing will be adjusted to be more attractive to first-time buyers; Kalian anticipates a price point in the $300,000 to $310,000 range.
The Kleiner Group in Eatontown, N.J., had to take a different approach with its midrise age-restricted condominium development, Xanadu at Wall, located less than 2 miles from the ocean in Wall Township, N.J. With close to 60 units sold in the 110-unit development, the builder couldn’t ask local officials to drop the age restriction, says Bruce Gassman, director of land acquisition for the Kleiner Group.
What they were able to do was to lower the restriction from age 55 to age 50. The builder hopes this will attract a slightly wider range of buyers for the units, which range from 1,390 to 1,525 square feet and are priced from the low $300,000s to the mid-$400,000s. All the other requirements remain the same, such as no children under the age of 19,” Gassman says.
Before taking their case to the township, Gassman talked to the homeowners' association and gained their support. “They were very understanding and supportive,” he says. “It helps for a whole bunch of reasons. … Over the time we were open, we had inquiries from people who were, say, 52, and we had to turn them down. This is something that will at least let us open up to a little bit larger marketplace. … It’s not a panacea, but every little bit helps.”
Ralph Zucker, president of new urbanist builder/developer Somerset Development in Lakewood, N.J., also enlisted the aid of his residents in his effort to expand his project's market. His 36-acre, 175-home age-restricted community, Pine River Village in Lakewood, had sold about 30 homes, ranging from 2,400 to 3,800 square feet.
“Then the world stopped spinning,” Zucker says. “It leaves us with a semi-finished development. … People want to live their golden years in a community that’s built, not one that is being built. If it takes a few years for the economy to turn around, they’re looking at unfinished foundations. It’s not pleasant.”
Zucker and his team sat down with their buyers and explained the market realities. Together, they came up with a solution. The residents of Pine River Village themselves petitioned the township to change the zoning on half the community. “The existing streets on the other side of community are not age-restricted,” Zucker notes. “It doesn’t affect their quality of life. There are just a smaller number of people who are age-restricted.”
The plan currently is going through the township’s approval process.
Zucker’s advice to other builders considering the move is to get the support of existing homeowners lined up before talking to local government. “It’s important to educate them,” he says. “They have to see the pros and cons.”
Pat Curry is senior editor, sales and marketing, at BUILDER magazine.
Learn more about markets featured in this article: Atlantic City, NJ, New York, NY.
