Hot market in over-55 housing stirs debate over consequences
By Clare Kittredge
NH Business Review
Published: Friday, May. 13, 2005

With an enormous clientele of aging baby boomers to tap, southern New Hampshire is seeing an influx of housing developments catering to the over-55 crowd.

"They’re happening everywhere," said Jill Robinson, a land-use planner with the Rockingham Planning Commission in Exeter. "It’s a huge market. New Hampshire is a desirable retirement area because of the tax situation, and housing is somewhat lower than Massachusetts, so we’re seeing a lot of market pressure."

Smaller, cheaper to buy and requiring less maintenance than regular homes, developments catering to empty-nesters offer residents over 55 or over 62 an alternative to the burdens of home ownership and sky-high property taxes. Often, they are encouraged by communities seeking to cut school costs.

"In all of southern New Hampshire, towns will begin to see these proposals, if they haven’t already,"said Robinson.

But some planners and demographers say encouraging an influx of elderly people could come back to haunt New Hampshire in the long run.

"The consequences of building mostly or all age-restricted housing are a very serious blow to our long-term economic health," said Peter Francese, director of demographic forecasts for the New England Economic Partnership.

Francese warns that seniors buy less and run up Medicaid bills, and housing them at the expense of younger workers will drive up the cost of services. "The key is balance. For every house that is age-restricted to 55 and up, you should build at least two that are workforce affordable housing."

Despite the $250,000-to-$350,000 per unit price tag, North Hampton Planning Board chairman Phil Wilson said, the town’s first senior housing development will give locals an alternative to being driven out of town by skyrocketing property taxes.

"The price range will be significantly lower than most new housing units being built in town," said Wilson. "A lot of older people are being forced out of their homes by high taxes. In the more expensive parts of town, houses cost $700,000 to $1.5 million, and one was appraised awhile ago at $3.9 million, and the elderly couple living there chose to sell and move rather than keep paying the taxes. Our tax rate is a bit over $15 per $1,000, so on a $3 million property, that’s $45,000 a year in taxes. It’s pretty expensive, especially if you’re living on Social Security."

Construction of Greystone Village, a 37-acre, 68-unit development with clubhouse and other amenities, is due to start in May. At least one resident in each unit must be 55 or older, and there will be no residents under 18.

Clearly, the market is hot.

"Our research dating back about six years shows that retirees 55 and older are looking to downsize, they like single-floor living and they prefer smaller lots with amenities and no maintenance," said Elmer Pease, principal of P.D. Associates LLC of Auburn, which has several senior housing developments in the works from North Hampton to Manchester. "They’ve had their fill. And for a developer, it’s a market that’s going to be increasing, based on all the census data."

The town of Newton recently approved a 60-unit elderly housing development. Kingston and East Kingston have seen an influx of age-restricted housing.

In Exeter, the first half of a huge 16-acre retirement complex geared to over-55-year-olds, Sterling Hill at Exeter, is almost sold out even though parts of it are yet to be built, according to Portsmouth developer Eric Katz. He says 80 percent of heads of household have to be 55 and older.

The first phase of 128 units in four buildings of the development is slated to be completed in the fall of 2006. Selling for upper $200,000 to low $300,000, the two-bedroom condominiums are laid out on one floor and come with heated underground garage space.

"Building 1 is completely sold out, Building 2 is about 80 percent sold, Building 3 is under construction and a little more than half are sold," said Katz, manager of Sterling Hill Development LLC. The second phase of 120 more units, conditionally approved by the planning board in March, is due to be finished in 2010.

Katz said half his buyers are coming from the immediate area, the rest from Massachusetts, Maine and beyond. Most are in their sixties and seventies; many are single.

Encouraging developers are the growing market and communities anxious to lower school costs, said Katz.

"Towns in recent years have been much more receptive to these developments because they don’t have additional children in their school systems," said Katz. "The other benefit in Exeter from their standpoint is they’re all private roads, so there are no public services. When you combine no children and no services, I guess it’s a win-win situation for a community from a financial perspective."

Pease said he just finished his first project for the over-55 market, a 149-home development in Manchester called the Ledgewood Retirement Community, and has just one unit left to sell.

"We also have one going in in Londonderry. We’re in the permitting process for one in Goffstown, and we’re looking at two other locations in southern New Hampshire,” said Pease.

In a variation on the theme, Stratham voters in March approved an affordable senior housing ordinance, allowing elderly housing in residential areas at a higher density than regular housing and with fewer restrictions.

The new ordinance allows housing for age 55 and up and does allow children, said Stratham Town Planner Chuck Grassie. It also requires developers to meet state and federal affordable housing guidelines.

Another new Stratham ordinance allows multifamily housing in the commercial district, encouraging mixed use and even small families, according to Grassie.

With both ordinances, "older people will be able to stay in town, and younger families will hopefully stay in Stratham instead of moving to Portsmouth and other towns," said Grassie.

Good news or bad?

Helping to fuel the trend is the federal Fair Housing Act, meant to protect citizens from housing discrimination based on race, color, nationality and sex. It was amended in 1988 to include disability and family status.

But housing defined as "housing for older persons" is exempt from the familial status requirements, according to the U.S. Department of Housing and Urban Development. This exempts developments occupied only by people 62 or older, or housing at least one person 55 or older in 80 percent of units or more.

Two years ago, Pease said, he was "instrumental" in having New Hampshire law changed to mirror federal law.

Also fueling the trend is the state’s aging population.

From 2000 to 2004, Tom Duffy, senior planner for the New Hampshire Office of Energy and Planning, said the state’s population grew by 4.8 percent from 1.24 million to 1.3 million. But residents over 55 grew by a whopping 15 percent, from 259,200 to 298,000, and by 2004 reached a 23 percent chunk of the state population, Duffy said.

Some 40 percent of all in-migrants to New Hampshire are from Massachusetts, followed by New York at 7 percent, Duffy added.

Meanwhile, the number of children under age 5 dropped by 3.5 percent – or 2,700 – from 2000 to 2004, from 75,383 to 72,678. And there was a drop of 4 percent – or 6,900 – in children ages 5 to 14, from 181,400 to 174,500, during the same time, said Duffy.

For Duffy, that’s not good news.

"The implications are very ominous for health care," said Duffy. "They’ve got all their stuff, the washers and dryers. I suppose if you’re into bifocal glasses – products like that are going to be hot. But there are advantages and disadvantages to an older and younger population. The municipal level wants age-restricted housing because there are no schoolkids, but there are costs associated with both. You need young workers. If there’s no place for them to live, it’s a constriction on the economy."

Robinson questioned whether the trend is really catering to elderly Granite Staters.

"Is this serving elderly people who actually live in New Hampshire, or is it going to serve a market of retirees from other places with higher incomes? I’m not taking a position," said Robinson, "but the issue is out there, and some towns are dealing with it by having an affordable component."

Francese said restricting housing to older people is discriminatory. Although he has been accused (in letters to local newspapers) of wanting to throw the elderly out of their homes, the outspoken demographer said, "That’s not true at all. What I have a problem with is doing that for the elderly and no one else. In a lot of towns, that’s all they’ll allow. What they’re not seeing is these elderly will make an equal call on taxpayers in the form of Medicaid costs … and people won’t be around to provide services, so the cost of services is going to skyrocket."

"People over 55 also spend half as much in retail establishments as people with children," said Francese. "So the retailers who do less business will pay less in property taxes, commercial real estate will be worth less and homeowners’ property taxes will rise."

Developers say families often move into the houses the old folks sell. "If you sell your house to somebody in Exeter, it may be a family that moves in," said Katz. "We’re providing housing for a certain segment of the population. There’s also single family and workforce housing, and I think communities are trying to address that."

The bottom line is serving a market niche, said Pease. "When they (the federal government) started talking about housing for older persons, they were talking about a specific group who’d had their families, sold their huge house and wanted to retire in communities with their own age group and similar interests," he said. "It wasn’t designed to discriminate. We’ve opened up another section of housing for people who had their families, paid their dues, want to relax and enjoy themselves. I don’t consider it excluding a group."