As my wife and I were out walking today, we discussed our future home requirements and desires. With two out of three of our children out of college, we're thinking of downsizing our home in the not-too-distant future. We'd like to buy something smaller than our existing home, but we don't want to buy a starter home or a condo. Unfortunately, at least in our area of the country, those seem to be the only two options for empty nesters who are looking for new home construction.
As we commiserated on this fact, we came to the conclusion that there has to be a market for high-end smaller homes for older adults. With the population aging and the baby boomer generation just starting to get to retirement age, it seems inevitable that smaller homes will be in high demand. My wife and I are hard pressed to believe that most "under-70" baby boomers will seriously consider downsizing into small condo units, the equivalent of what we once called an apartment complex, or into smaller homes with contractor grade flooring, lighting, and appliances. Yet those seem to be the only two choices available today for older adults, unless they choose to buy a small home and completely remodel it themselves.
Homebuilders should seriously take note of the country's aging population and begin to design and build more new high end smaller homes for this demographic. Effectively, this group of homebuyers will be looking for the "Porsche'd-out" home, both in size and features.
This market opportunity offers several benefits to the builder, real estate agent, and municipality. First, it offers a high-margin product to a large population with deep pockets. Second, though I'm not a fan of cluster zoning, due to the smaller footprint associated with a compact home, more homes can be built per square acre. This translates into more revenue for the builder, real estate agent, and even for the municipality. Most town or cities would bend over backward to have more positive cash flow residential property within their borders. With today's sky-high cost per pupil expenditures for public education, just one child in a home can easily create a negative tax cash flow to the municipality. As a result, just as municipalities have offered tax breaks to builders for constructing 50+ age condo unit complexes, they should do the same for builders constructing high-end smaller homes for older adults in 50-plus cluster zones.
With a housing market that has been in decline for about six years now, building higher-end smaller homes for older adults may be just the ticket for turning the market around. Another benefit to this concept is that the same smaller home designs and floor plans could also be used for the younger and/or less wealthy market segments. To lower the costs for these populations, some of the high-end internal features could be reduced to "builder's-grade." The only difference would be that these homes would not be eligible for tax breaks because of the fact that they would more than likely have children in them and as a result be negative tax flows for the community.
Building smaller homes also offers a couple of "green" advantages. Energy demands associated with smaller homes are less, and the effective "carbon footprint" for each occupant living in these smaller homes is reduced. Ultimately, this translates into annual energy cost savings for the occupants and a better environment for everyone.
Mark J. Donovan's website is http://www.HomeAdditionPlus.com.