Struggling 'Active Adult' Developments Drop Age Restrictions
By KENNETH R. GOSSELIN, email@example.com
The Hartford Courant
December 13, 2010
In the 1990s, towns across Connecticut enthusiastically approved plans to build housing developments restricted to adults 55 and over, attracted by the idea of solid buyers who would pay their taxes and be active in civic affairs but not add children to school systems.
For retirees, it was a chance to stay in the same towns where they had lived for years.
The number of these "active adult" communities in the state mushroomed — now at 200, by one estimate, representing thousands of single-family houses and condominiums. It worked well for many: Developments flourished and sold out.
But as the housing recession deepened, a growing number of the developments were left unfinished. Some developers have fallen into bankruptcy, others are struggling and looking for a way out.
Now, they've found one.
Following a trend that has unfolded in the past year elsewhere in the country, at least three partly completed "active adult" projects in Greater Hartford — two in Ellington and one in Tolland — have won local approval to drop the age restriction.
In Tolland, Belvedere Ridge provides the most striking example of the slowdown: Envisioned as a community of 66 homes, just two have sold since 2006.
Each of the three developers, including a bank that aims to sell the property to a new builder, are hoping the change will spur sales in a still-weak housing market.
While the conversions are likely to ease financial pressures on developers, they have the potential to spark controversy because the homes were specially approved under the condition that they be only for people over 55. So far, there hasn't been any organized opposition to the change, but some people are raising concerns about what the conversions mean for the future of housing for a fast-growing segment of the population.
Colin Milner, founder of the International Council on Active Aging, said a spate of conversions could reduce the backlog of housing for 55 and over — making it tougher for people that age to find housing in the future. It also could push up the prices buyers may have to pay, he said.
"Will older adults have the adequate number of communities that they will need?" asked Milner, who has been consulted by the White House on issues involving aging. "It's still up in the air."
A Jump Start?
Among the three developments in Tolland and Ellington, 243 housing units — a mix of single-family houses and townhouses — were envisioned. So far, just 17 have been sold.
There are early signs, however, that the conversions are likely to jump start stalled projects.
At Windermere Village in Ellington, the developer, who broke ground in early 2008, went 18 months without a single offer. At most there might be three people a week coming to take peek at a development, where eight units have been sold out of 123 that were planned.
"I felt like I was one of those stores in New York and people were just window shopping," said William H. Coons Jr., the project's developer.
Since the age restriction was dropped, as of Sept. 1, two buyers — a couple in their 40s and one in their 20s with a young child — have placed deposits on single-family houses, Coons said.
Coons and other developers say the nature of the developments, while now allowing children, won't change radically because the homes remain modest, typically under 2,500 square feet with 2 or 3 bedrooms and small yards.Nevertheless, the conversions are ruffling some neighbors who thought the developments would remain age-restricted.
When Christine Lacas and her husband built a new home in Tolland in 2007, she was told the nearby Belvedere Ridge was 55 and over. She was relieved to know there would be no children because there was a wooded area on her property with a stream that she can't easily see from her house.
"We were told this was age restricted and we expected it to remain that way," Lacas said. "I don't want my backyard to be a recreation area for kids in the upper part of that development."
'Everything Just Stopped'
When Estelle Williamson moved into Center Village in Ellington with her husband, John, three years ago, she was the second resident of the 55-and-older community. Then another single-family house went up and then another.
"We thought, 'This place is really starting to build up,'" Williamson said. "Then, it stopped. Everything just stopped."
The lawn of Williamson's Cape Cod-style house is well-maintained, and her home is decorated for the holidays with lights and festive globes of evergreen hanging in the front porch. But all around her are vacant fields.
She fetches a three-ring binder from a closet and opens it on her dining room table. She points to a map showing the 49 houses and a couple of duplexes that were supposed to be constructed. So far, just five houses and a duplex have been sold.
In 2009, Rockville Bank took over the property in a foreclosure from the original developer. The bank said opening the development to a larger segment of buyers made sense in a weak housing market. The bank says it is now in advanced negotiations with possible new owners and could reach an agreement early next year.
Williamson, whose husband died earlier this year, said she and her neighbors didn't oppose the conversion. She says she raised a large family, and doesn't mind that there might be children in the development. What is more important, she said, is getting the development moving again.
The roads in Center Village haven't been accepted by the town. The handful of homeowners have to share costs that should have been spread out among more property owners. Street lighting still needs to be installed.
"It's very dark around here at night," Williamson said. "I would like to see it finished."
Williamson, who paid $350,000 for her home in 2007, knows the house has lost value. A stalled development doesn't attract buyers and lenders are reluctant to finance purchases under such conditions.
The New Normal
The flow of buyers to 55 and over communities slowed to trickle in 2008, as home sales weakened dramatically and property values took a hit.
"It is difficult to sell today, and therefore moves to retirement communities have slowed down," said Susan M. Wachter, professor of real estate and finance at the Wharton School of Business at the University of Pennsylvania. "Potential retirees whose homes are 'underwater,' with mortgages greater than home values make it difficult to sell."
Retirement savings also have been eroded in the financial services meltdown in recent years, forcing some to work longer than expected.
"Staying in place is the new normal," Wachter said.
Wachter said the move to convert to 55-and-over communities could gain momentum, especially if the recovery of the housing market is slow.
Towns in Connecticut didn't quickly embrace the change. In Ellington, town zoning officials initially rebuffed efforts to drop the age restriction, preferring to let the market work itself out, according to town planner Rob Phillips.
But as Center Village's developer fell into bankruptcy and owners there and in Windermere Village lined up to support the change, zoning officials softened their stance. The modest size of the homes, many of them with two bedrooms, are not conducive to raising large families — so the change wouldn't significantly alter what made the 55 and over restriction attractive to start with, Phillips said.
In addition, at Windermere Village, the developer agreed to set aside 20 percent of the units for "workforce" housing to be priced at $250,000.
Knocking on the Door
Not everyone is willing to pull back from the 55 and over market, however.
In Berlin, a developer backed by a group of private investors purchased the Beckley Farms development in August from Webster Bank, which had foreclosed on the project.
The $50 million development is expected to have 156 units in all, including 54 townhouses, to be built in five phases. The project has 22 single-family houses that were built and sold before the previous developer ran into trouble. There also are eight houses that were up and sided, but not finished on the inside.
Jeff Respler, the project's managing partner, said the new owners already have invested $500,000 in improvements. He said the community's feels like it is out in the country, but is still close to shopping and restaurants on the Berlin Turnpike.
"We had people coming knocking on the front door of our sales office, asking for more information," Respler said. "There's definitely a market out there."
But in Tolland, developer Lenard Thylan of New York-based Tomlen LLC said he is looking for a fresh start at Belvedere Ridge. The development also has a new name: Somerset Woods.
Thylan said he believes that the "active adult" market has suffered from overbuilding — and that the niche of the age restriction just shut out too many potential buyers.
"The change is very simple," Thylan said. "Real estate is predicated on market concerns. The market needed to be expanded. It made more sense, if we had the ability to sell to everyone."
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