Real Estate: Not Your Father's Retirement

The 3,000-acre site west of Phoenix isn't much to look at--not yet, anyway. Far from urbanity, past a highway sign warning no services next 38 miles and amid acres of saguaro cactus and creosote bushes, only a few streets have been built and a few foundations poured. But last week the Del Webb division of the homebuilding giant Pulte Homes Inc. closed on its first house here at the foot of the White Tank Mountains.

The company hopes 7,200 other "active adult" households will join this new neighborhood, called Sun City Festival. There will be no shuffleboard courts or bowling alleys, the hot amenities when retirees began coming to communities like this nearly a half century ago. Instead, there will be the accouterments better suited for modern-day retirees: Pilates classes, home offices, high ceilings and marble countertops. They're all part of the plan builders are using to custom-build a lifestyle that calls out "Home Sweet Home" to aging baby boomers.

When it comes to housing, boomers have had a fabulous run. Consider: in 1950, when the first boomers were still preparing for kindergarten, the average newly built home measured just 963 square feet, one third of U.S. houses lacked complete indoor plumbing and 45 percent of Americans lived in rented dwellings. Today new homes average 2,434 square feet, the homeownership rate is nearly 70 percent and many baby-boomer homeowners lounge in spalike master baths, luxuriating beneath multiple shower heads and soaking in jetted tubs with horsepower rivaling the original Volkswagen Beetle's.

Even today, as the great real-estate boom of the early 21st century shifts to a buyer's market, baby boomers are still sitting atop trillions in equity generated by swollen home values. And as the oldest boomers hit 60, the real-estate industry stands ready to help this first wave cash in. Some boomers will follow the traditional route, retiring to updated versions of "age-restricted" sun-belt communities. Others will stay in their current locations, trading down to smaller houses or outfitting their existing homes to accommodate their aging bodies. Some of the wealthiest boomers will toggle between multiple homes--a lifestyle some are leading even before retirement.

Few companies are anticipating boomers' evolving housing needs more than Pulte's Del Webb division, the nation's biggest builder of retirement homes. Its namesake founder was a colorful Phoenix developer who built the Flamingo Hotel in Las Vegas for mobster Bugsy Siegel in the 1940s. On Jan. 1, 1960, Webb opened the sun belt's first retirement community, Sun City, which attracted 100,000 visitors (and 237 buyers) its first weekend.

To modern eyes--especially those conditioned by endless hours of real-estate porn on HGTV--the original Sun City abodes were anything but luxurious. They measured as small as 858 square feet with tiny one-window master bedrooms, no dining room and carports instead of garages. But despite the spartan layouts, Webb's ability to sell the notion of a retirement lifestyle was a genuine innovation. "From 2006 it's easy to mock all those Barcalounging, bingo-playing septuagenarians living around shuffleboard courts, but in fact it was not only a brilliant piece of marketing, it turned out to have a very positive effect on the kind of lifestyles people had," says Marc Freedman, author of "Prime Time: How Baby Boomers Will Reinvent Retirement and Revolutionize America." "Del Webb essentially summoned the older population off the porch and created the expectation that they'd lead a much more active life."