May 28, 2015

55+ Housing: Some Thoughts from the New Guy

My series of Generational Shifts articles concluded last week and I was amazed at how many positive responses and requests to utilize the series  for HBA publications were sent to me. What pleased me was the comments by the very next generation I was writing about. The comments were mainly about how well I understood the next generation, at least as it pertains to the home building industry. It was only through asking questions and then listening that I was able to connect so many dots about the future of our association. One of the next generation builders, a young man with a wise mind and desire o continue his family's three generation building company, thought it would be a good idea to talk about his future in home building. Michael J. Kokes, an officer of the Shore Builders Association of Central New Jersey, is that third generation home builder. I knew his grandfather, Mike Kokes, a New Jersey Builders Association's Legend of Housing, and his father, Jan Kokes. I also know his uncle, Jerry Kokes. I'm amazed at how long I've been a member of our association to officially know three generations of builders. The Kokes Organization has been building since the early 1960's and has been a member of NAHB during that time as well. 

Thank you, Michael, for your article and continuation of the home building profession and your desire to be an association leader and future president.

 55+ Housing: Some Thoughts from the New Guy
by Michael J. Kokes

Michael J. Kokes
My family has made a name for itself by building age restricted housing for the past 51 years. My grandfather started building senior housing around 1964, with the start of Crestwood Village, and through the decades my family has built nearly 20,000 units (not all age restricted). Oddly, though, as I begin my journey as the next generation in the active adult market I realize that the rules of the game have change. Some of the steadfast norms that my family has adhered to for decades have change. Complicating things further has been the prolonged recession. The areas I see the most change in are our customers’ employment status, urbanization, non-qualification due to dependents, and lack of product. 

One of the largest marketing challenges we have had to overcome, and still work on every day, has been the employment status of our customers. What we have found is that people either don’t visit our communities because they feel they won’t fit in as they are still working, or that they can’t move in because they are still working. Neither, of which is accurate! Actually, quite contrary, as many of the people moving into our communities today are still working. To further back this up, the Bureau of Labor Statistics states that for 2014 61% of all people between the age of 55 and 64 are employed. 65 and older, and the number is 18%. If you take the two numbers together, 38% of all people over the age of 55 are still working. Our way of overcoming this has been multi-pronged, as we have changed the message and the medium for the message to reach our buyer. Respectively, we have implemented campaigns of “living the retirement lifestyle while you still work,” and utilizing more web based marketing. According to some sources, 90% of the entire US population is on the internet in some fashion. I believe it, as having a larger web presence, has been the largest contributor to increasing our traffic. 

In the 60’s, the communities my grandfather started flourished due to the race riots. As chaos and uncertainty ensued in the cities, people flocked to the “country sides” of New Jersey. As the decades passed, more and more 55+ buyers continued to move out to suburbia in search of a slower pace and more relaxed environment. Content with the local doctor, mom and pop restaurants, and social functions of the communities, our developments thrived. Today, more and more 55+ buyers are choosing to live in the urban environment, moving just outside of New York City, in places like Hoboken and Jersey City. The cause, they want to be closer to their kids and grandkids who still work in the urban areas, and within walking distance of the finest arts, restaurants, shopping, and doctors in the world. Finally, the modern day apartments offer virtually maintenance free living. Who can blame them? Except, as someone who moved out of a condo last year, let me tell you, the close proximity to others gets tiring real quick. Our way of dealing with this change has been to explain the proximity to mass transit, shopping, and major transportation arteries. Will this change though, who knows, but if we continue to see the difficulties facing our cities recently, you never know.

Although this problem hasn't come to light as frequently as the others, I do believe that it will become an ever increasing issue in the future. This issue is the disqualification of living in our communities based upon dependents. This can show itself in two ways. One, that many families are living with each other intergenerationaly, as they still haven't fully recovered from the financial crisis and two, that people are waiting till later in their lives to have children. As a basis, the bylaws of any typical age restricted community, is such that children under the age of 19 cannot live there. Additionally, children under the age of 19 can only stay for approximately 1 month in duration. The first situation is fairly self-explanatory, but let’s reviews the second. According to the Census Bureau, the number of women delaying child birth has risen exponentially. Surprisingly, women aged 35 and older has been the largest contributor. Additionally, men have delayed child birth even later then women, now choosing to have children into their 40s. Simple math shows that this will hinder someone’s qualification for living in our communities. Furthermore, history has shown that many people wait till their children are “established” before making the decision to move into a 55+ community. Many wouldn’t consider their children in their late teens or early twenties “established.” As such, I feel that the 55+ model will become harder and harder to sell to future customers. 

Finally, this complication may be more unique to New Jersey and the Northeast in general, but it still needs to be discussed. Based upon various constraints like environmental, municipal, and other complications, it is becoming harder and harder to source larger plots of land to build 55+ communities. In my grandfather and fathers era, it wasn’t unlikely to find 1,000+ unit jobs, today, we are lucky to find something 200+. What we have found, is that it is much harder to make the affordability and cost effectiveness of the various amenities available to our customers. For example, the cost of an indoor and outdoor pool is much easier to spread across 1,000 families, where this would be cost prohibitive in a smaller development. Additionally, this isn’t just the upfront development cost, but also the recurring Home Owners Association (HOA) fee. My thought is that we are going to see less amenity rich communities in the future. 

So are you depressed with this information? Don’t be! The future remains bright for homebuilding and 55+ communities as intelligent, young, aspirational people continue to enter the industry. As with anything, I am optimistic that we can overcome these and other future challenges that are presented to us. I know personally that we, and other builders, remain dedicated to providing quality and affordable housing in the New Jersey area.

About the author: Michael J Kokes is the Vice President of Project Planning for The Kokes Organization, a 51 year old real estate company located in Manchester New Jersey, specializing in 55+ housing. Mr. Kokes is also a Director at Harmony Bank, a community bank located in Jackson New Jersey, serving the Monmouth and Ocean County communities. Additionally, Mr. Kokes serves as a Director and Treasurer of his local home builders association, Shore Builders Association of Central New Jersey as well as Pinelands Environmental Subcommittee chairman at the New Jersey Builders Association. Mr. Kokes resides in Wall Township New Jersey with his wife and son.             

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