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."

It's a marketing pitch that's changed with the times. At Festival, Del Webb's newest Phoenix-area community, the homes themselves have been reconfigured to suit boomers' need to live large. The biggest houses will be 2,849 square feet, with stainless-steel appliances, 10-foot ceilings and granite countertops. At the Sage Center for Wellness and Higher Learning, the neighborhood's clubhouse, there will be fitness equipment and swimming pools, but as at other recent Del Webb communities, much of the focus will be on "soft amenities": cooking classes, yoga and core training sessions, and even "adventure programming" that includes white-water rafting and skydiving. To complement the physical activities, there will also be programs that target boomers' brains, including extension courses offered on-site through a partnership with Arizona State University. As the new community fills up, residents will be able to choose from classes like Religion and Conflict, Beginning Guitar or Introduction to Murder, a course about trial strategy taught by a former homicide prosecutor and judge. It's a sign that while 20th-century retirees obsessed over golf handicaps, next-gen oldsters are more focused on mental acuity. "People are concerned that their mind and body both reach the finish line at the same time," says Deborah Blake, a Pulte's Del Webb VP.

Not every resident will have free time for those activities. In the most dramatic shift from traditional retirement communities, 42 percent of today's buyers plan to continue working. They're people like Linda Jane Austen, 59, who plans to move in next year at Festival beside her sister Susan Pullen, 62. Austen is education director at the Scottsdale Center for the Performing Arts, and Pullen works at a behavioral health facility. Both are selling their existing homes and will use the proceeds to pay for their new ones, which will cost $235,000 and $280,000, respectively. (Like half of all Del Webb buyers, they will move in with little or no mortgage debt.) Buyers like them who plan to continue working ask different questions than traditional retirement-home buyers, such as "How's the commute?" To beat traffic, Austen figures she'll work at home each morning before heading to the office.

As builders pound together these new residences, industry watchers debate whether boomers will really buy in. "The age-old question in our business is, 'Will the boomers truly be different, or will I become my father?' " says Dave Schreiner, who runs Pulte's active-adult business. He cites company surveys that make him optimistic: 47 percent of boomers ages 51 to 60 said they "definitely or likely would consider moving to an active-adult community," and outside data from groups like the National Association of Realtors show similar results. Still, there are doubters who figure baby boomers have spent a lifetime rejecting whatever their parents once embraced. Peter Francese, demographic-trends analyst at Ogilvy & Mather, says: "In my view those developments will hold vastly less appeal."

One major change since previous generations retired is that people no longer have to move to Arizona or Florida to find an amenity-rich retirement community. Despite the popular image that great masses of retirees typically do so, says Wake Forest demographer Charles Longino, author of "Retirement Migration in America," relatively small percentages--less than 5 percent--of people over 60 typically move out of state. Even though boomers are wealthier, healthier and better traveled--all key predictors of retirement relocation--so far there's no evidence that they'll move more or less than their parents did, he says. So to hedge their bets, builders have diversified, building active-adult communities in places far from the sun belt. Del Webb, for instance, will be selling homes in 20 states--including chilly locations like Michigan, Illinois and Massachusetts--by the year-end.

Even as retirement beckons, some boomers will not only want to stay in the same region but in their current house. For them, a key concern is how it will accommodate their aging bodies. Dave Heinlein, a 57-year-old retired builder in Portland, Ore., is about to begin a large renovation of his bathroom. Because he has bad knees, he's ordered a more-accessible shower with a built-in seat (it can also accommodate grab bars and a wheelchair ramp someday), a less slippery floor and a "comfort-height" toilet. To do the job, he's hired In Your Home, a Lake Oswego, Ore., business that specializes in remodeling homes for older people. Co-owner David Dickinson says bathrooms are the most popular revamp, but his team also widens doorways, builds ramps, installs lever doorknobs, enhances lighting (to help aging eyes), subcontracts for elevator installation and sells several versions of those "I've fallen and I can't get up" alarm systems. While many clients call after a life-changing incident--like a broken hip--some, like Heinlein, are still relatively young but anticipate the frailties they'll encounter in years to come. "They're saying, 'What do I need to do to this house to be happy here for the next 30 years?' " Dickinson says. As a result, the National Association of Home Builders says "aging-in-place" renovations may become a $20 billion-a-year business within a few years.

For boomers willing to leave their current digs, one popular move is to sell their suburban homes and relocate to smaller spaces downtown, which puts them closer to jobs, cultural and culinary offerings, as well as public transportation. With their third child off to college, this year Boston architect Peter Madsen, 61, and his wife, Betsy, 59, sold their home in suburban Brookline and moved into a Beacon Hill town house. Now they amble to the theater, walk or take the subway to work, and Peter bikes to the gym. Some weeks, he says, "the only time I'm in my car is to move it on Wednesday night for street cleaning."

Plotting retirement-age relocations can be difficult--especially at a time when real-estate prices have begun to slide and homes in many markets are now taking months to sell. For boomers in once hot markets that have chilled, it may make sense to delay big moves until supply and demand get back into balance. But boomers can also take comfort in the fact that whatever they do, there's no rule against changing your mind. Housing pros even have a well-developed lingo to describe these people: retirees who move to the sun belt, dislike it and move back home are called "fullbacks," while folks who retreat to an in-between location (say, a Chicagoan who moves to Florida and then Tennessee) are called "halfbacks." Then there are folks like Markie and Joe Cluff, who retired to an over-55 development in Chandler, Ariz., last year. Joe, 59 and a former building inspector, missed working, so he took a job as a quality-assurance inspector at the Phoenix airport. And they're already trading up to a second retirement home, this time at Sun City Anthem at Merrill Ranch in nearby Florence. They're proof of something that every golfer knows, and everyone planning retirement should remember: sometimes there's no shame in taking a mulligan.