For Retirees, One Home Is Not Enough
By MOTOKO RICH
Published: June 9, 2005
THE most serendipitous move David and Penny Handorf ever made, as far as they are concerned, was buying a house 25 years ago in San Jose, Calif.
Last year they sold the four-bedroom house, which they bought in 1980 for $300,000, for just under $1.4 million. With the proceeds they bought a custom-built 5,200-square-foot house in Park City, Utah, for $700,000 and a four-bedroom Tuscan-style house with a guest casita near Chandler, Ariz., for $400,000.
"Without the San Jose sale, we wouldn't have been able to have both places," said Mr. Handorf, 61, who retired as a manager from a semiconductor manufacturer in 2003.
In the Handorfs' case, at least, "retirement has been transformed by the real estate boom," he said.
Call it the sell one, buy two plan. With the upsurge in house prices in hot markets, a growing number of retirees are cashing out and finding that they can afford to buy not one but two retirement homes. What's more, people now retiring and those preparing to have generally collected more wealth than previous generations. As affluent baby boomers in particular approach retirement, the trend toward two homes is likely to increase.
According to the National Association of Realtors, 51 percent of all vacation homes sold in 2004 went to buyers 55 and older, in a year when vacation-home buying in general was up 19.8 percent, to 1.02 million units, from 2003.
Of course, in retirement, the definition of a vacation home is fluid. Many retirees are splitting their time between a home near where they worked and raised families, and one in a Sun Belt locale. Although there have always been snowbirds, as retirees who migrate to follow the sun are commonly known, Greg Snyder, the division president in Central New Jersey for U.S. Home, a homebuilder, said many more retirees can afford to buy two homes now than in the past. At Greenbriar Westlake, a retirement community in Jackson, N.J., that is being developed by U.S. Home, nearly 40 percent of all homebuyers own another home in Florida or some other Sun Belt state, Mr. Snyder said, up from about 20 percent of buyers in the developer's other 55-and-over communities 10 years ago.
In addition to their swollen home equity, many of today's retirees have accumulated large amounts of wealth. And the baby boomers, the oldest of whom will turn 60 next year, appear to be "on the verge of retiring wealthier and healthier," said Nicolas P. Retsinas, the director of the Joint Center for Housing Studies at Harvard.
"I think I'm different from my parents," said Billy Halpern, a 53-year-old hair salon owner who, with his wife, Marjorie Halpern, 57, a Weight Watchers leader, has bought a house in a gated community in Boynton Beach, Fla., and a condominium in a retirement enclave on Long Island. When his parents retired, he said, "they bought a condo on Long Island and that was fine; they were near their family, and that was enough for them."
Mr. Halpern, by contrast, said he didn't like the Northern winters and preferred to spend the cold months in Florida. "I want a little more out of life than they took," he said.
In an effort to capture the growing group of retirees inclined to buy two homes, developers are building age-restricted retirement communities across the Northeast, the Atlantic Seaboard and parts of the Midwest as fast as they can.
The number of so-called "active adult" communities in 10 states in those regions, including New York, New Jersey, Connecticut, Massachusetts, Virginia and Illinois, increased by nearly 500 percent between 1995 and 2004, from 60 to 355, said William R. Parks, a consultant to homebuilders who works in Scottsdale, Ariz.
In some cases - particularly in the Northeast, where real estate prices may make it harder for buyers to afford two homes - builders are selling smaller town houses and condos.
"We're trying to develop communities that have a variety of different product offerings so that somebody can come in at various price points," said Mitchell C. Hochberg, the president for the Northeast United States region of WCI Communities, a homebuilder that develops communities for those over 55 in both the Northeast and in Florida. "So if they want to have two homes, they have the ability to buy something smaller here rather than spending more and only having one place."
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