New Jersey municipalities, many with mounting government and school costs, a decade ago seized on senior housing as a solution to their budget problems.
Promises by developers to build 55-and-over projects in communities such as Galloway Township, Absecon and Millville, however, have never been fulfilled. And the depressed real estate market and poor overall economy has some developers trying to salvage their projects by opening them to buyers of all ages.
In Millville, Cumberland County, officials approved more than 1,000 senior housing units in recent years, just before the real estate collapse toward the latter half of the last decade. But of the half doxen proposed developments, only one — The Four Seasons on Buckshutem Road — was built.
“I was always a big supporter of senior housing. It was a 100 percent ratable and had very little impact on the schools or (other services) like the police,” said Millville Commissioner James Quinn. “The seniors would also bring to their community their talent, skills and time.”
Quinn defends the decision to bring in this type of housing, noting its many benefits. The Four Seasons has been very successful, he said.
The idea was that seniors — particularly the large baby boomer generation — would sell their homes and move into the adult communities, often in a downtown setting where they could shop and easily become involved in community programs.
The number of seniors in the state is climbing. From 2000 to 2010, New Jersey’s overall population grew by 4.5 percent while its senior population grew by 6.5 percent, according to figures from the U.S. Census Bureau.
Developers, with the housing boom at the time, were confident the seniors could sell their current homes and move into a new upscale facility. Municipalities were on board because it wouldn’t add to school enrollment.
Since the real estate market’s collapse, many of these projects have been left unfinished; some of the existing complexes in places such as Millville, Absecon, Egg Harbor Township and Mays Landing have had trouble filling their vacancies.
While some developers are getting by, others have gone bankrupt and have lost their properties to the bank or other developers. With demand lacking, some of these projects are being changed into housing for all ages, a controversial proposal for many towns.
Jeff Otteau, a real estate analyst and president of Otteau Valuation Group Inc., said the projects were a new concept created on the premise that the baby boomers would retire at unprecedented levels.
It “sprung from the expectation that baby boomers would be entering retirement at an early age, flush with cash and able to afford an affluent lifestyle that redefined the concept of ‘retirement living,’” he said. “This led to the design and construction of a new variation on traditional retirement housing that was, essentially, larger, more luxurious and more expensive than traditional retirement housing.”
But several factors, including the recession, the housing market collapse and a series of long-term economic and demographic shifts, dramatically changed the real estate demand, he said. Many age-restricted new construction projects have been stalled and unable to proceed with development and construction. Lenders are generally unwilling to finance new construction of age-restricted projects due to a lack of economic feasibility, he said.
In an April 2009 study by The MetLife Mature Market Institute and the National Association of Home Builders, fewer than 3 percent of 55-and-older households have chosen to move to senior housing.
Otteau said only about 30 percent of potential buyers would qualify for such a complex. He also said New Jersey has one of the largest rates of seniors leaving to live in other states “so that their retirement dollars will stretch further.”
Other factors include: seniors being more likely to stay in their home than originally anticipated; a lack of properly funded retirement funds; seniors deciding to work later into their lives; and more homes hosting multi-generations of families — due both to elderly parents and adult children living at home.
Otteau estimates that, based on the current amount of inventory and the rate of the sales, it would take more than 10 and a half years to sell all the new construction and nearly 17 months to sell all existing vacant homes for senior housing. Throughout all of South Jersey it would take more than 29 years to sell all new construction and 14 months to sell all existing units. Otteau said as the era of the large baby boomers generation ends there will be even fewer seniors available to purchase these homes.
The lack of demand has lowered the values of the properties, Otteau said.
The average selling price for Gatherings at Bel Aire Lakes in Absecon declined by 40 percent from 2006 to 2011, he said.
The Four Seasons at Galloway declined by 44 percent in that same time, which Otteau said indicates deep distress in the age-restricted sector.
Robert Shamberg, owner of Prudential Diversified Realty and Associates in Galloway Township, sells homes at the Four Seasons. He said many residents in their 50s and even 60s may think of it as a place for later in life — not at 55 years old.
“There is not the market there,” he said. “There is turnover, but it’s not the best situation because of the restraints. You must be over 55 and choose that lifestyle.”
But those who do pick that lifestyle say there are many advantages to it.
Four Seasons resident Dave Carey moved to the Four Seasons with his wife in 2006. The couple had lived in Long Island, but since they did not have children, Carey said they often felt like they did not have much of a connection to their neighbors.
But at their new home all of the residents have a common bond and look after each other. For example, Carey said, when someone is sick it is common for many of the fellow residents to bring over meals.
“We have made 10 times the number of friends we had (in Long Island),” he said. “For us it’s been fantastic. We feel much more comfortable.”
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