Retiree Havens Turn Younger to Combat the Housing Bust

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DEERFIELD BEACH, Fla. — For Sheldon Behr, buying a condo in Century Village East has meant the chance to live out his retirement years with other older adults who enjoy golf, long walks and comedy nights at the clubhouse. But with the financial crisis deepening and the housing market stalled, a growing number of units at the 55-and-over community are lying vacant.

Some residents are now considering the once unthinkable: letting younger people in — a proposition that has pitted neighbor against neighbor. "We don’t want someone to come in and suddenly have a flock of kids," says Mr. Behr, 65 years old, who opposes the move. "That’ll destroy our village forever."

At "active adult" developments across the U.S., residents are debating whether to scrap the age restrictions that have helped define their way of life for almost five decades. Proponents of "age desegregation," as it’s known in the industry, say opening the doors to people under 55 is the only way their once-idyllic enclaves can stay afloat amid a worsening economic climate.

From Florida to Arizona, condos are sitting idle as potential buyers find themselves stuck, unable to sell their houses and relocate. Residents of one New Jersey 55-plus development are living next to open foundations, with only 32 of 175 planned homes sold. And with retirement accounts hammered by the investment markets’ plunge, people living in these communities are falling behind on homeowners’ dues and scaling back on clubhouse activities.

But desegregation is nonetheless a hard sell among some residents of these developments, who say the change would ruin the dream they bought into in the first place. An influx of younger residents could also affect relations with surrounding neighborhoods. Municipalities have long favored developments for retirees because they don’t require additional services like schools.

"Towns see these people as contributing to the tax base but not costing the community so much," says William Frey, a demographer with the Brookings Institution, a Washington think tank. "But there is a whole host of ancillary services that go with having lots of young children and teenagers. Then, you’re talking about a significant increase in municipal expenses."

No one is predicting that age-restricted living will disappear entirely. But the financial downturn could be the tipping point that forces some places to reinvent themselves.

 Many of these communities had already been struggling with declining sales as aging baby boomers either postpone retirement or opt to retire elsewhere. Last year, about 1.1 million households could be found in active-adult settings, down from 1.8 million in 2001, according to the National Association of Home Builders. And in a recent survey by AARP, the membership group for older Americans, almost nine in 10 people said they don’t want to move at all in retirement; instead, they want to "age in place."

Retirement communities were popularized in the early 1960s by real-estate entrepreneurs like Del Webb, whose Sun City developments promoted the idea of a leisure-filled lifestyle specifically for older adults. In Arizona, California and Florida, retirees lined up to buy one-story villas bordering golf courses.

Usually run by elected boards of homeowners, these communities have spread to the Midwest and Northeast in recent years. They usually offer activities geared toward retirees, feature strict rules about homes’ appearances, and have their own security staff and volunteer "posses" to keep an eye out for violations.

Typically, 80% of residents in active-adult communities must be at least 55 years old to meet federal regulations that allow developments to exclude children. (Many neighborhoods have rules requiring one household member to meet the age requirement.) Some enjoy low taxes. Residents of Sun City, a retirement community in Sun City, Ariz., for instance, don’t pay city taxes because the development is technically unincorporated. They also pay relatively low school taxes, making their overall tax burden one-half to two-thirds lower than people in nearby towns, according to the Arizona Department of Commerce.

Lower Age Requirement
Last year, residents of the nearby Sun City Grand in Surprise, Ariz., voted to lower their age requirement to 45 from 55 — though children under age 19 still aren’t allowed as permanent residents.

The board of the 9,802-unit development, built in 1996, "felt like it would help our community financially in many areas," says Meda Cates, membership director for the Sun City Grand Community Association. "As people grow older, they stay home more. They don’t golf, they don’t use the facilities or the restaurants."

Since Sun City Grand relaxed its age restrictions, the community has drawn people like Tom Butler, 48, a kitchen designer, and his wife, Jill, who is 53. The place popped up on their radar a year ago, when Ms. Butler visited her daughter-in-law’s grandparents, who live in the community. She says she was "totally charmed by it," and drawn to the "plethora of activities." This fall, the couple bought one of Sun City Grand’s "Casita" models, a ranch-style home with a pool and a guest house. "Sometimes, people look at us and say, ‘You’re not old enough to be here,’ " says Ms. Butler. "But we take it as a compliment."

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