A Linkedin Debate/Discussion

One of the things that all the Social Media out there does is foster relationships and discussion/debate. At NARA, we are participating on Facebook, Linkedin and also through this blog. Here is a discussion that occurred this week on Linkedin. If you have an opinion, we'd love to hear it....and we welcome you to join us on Linkedin, as well. Dan Owens


INITIAL QUESTION FROM DAN REXFORD, NARA LINKEDIN GROUP MEMBER
Former Erickson Retirement Community Executive
Current Firm: Equity Partners, Inc., Baltimore, MD

"Is there a correlation? Re: M.P. McQueen's article in today's WSJ, "Real-Estate Investing: the Best and Worst Markets"
McQueen summarizes Cary, NC's Local Marketing Monitor, Inc.'s (LMM) work. They cite: Durham, Huntsville, Indianapolis, Knoxville, Lexington, Little Rock, Winston Salem, Oklahoma City, Greenville, and Jackson as the best markets for single-family real estate investment. Reno, Las Vegas, Orlando, Lakeland, Prescott, Phoenix, Daytona, Sarasota, Naples, and Forty Myers are identified as the worst. If LMM is accurate, it appears to me that the presence of retiree housing is still relatively unimportant when you are evaluating these types of investments.
Thoughts? Criticisms? Theories?"
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Response from Dan Owens, NARA DIRECTOR • "Dan, my thoughts? Follow two phenomenon from the recent downturn. Look at the markets where there was easy credit and many speculators that artificially drove up demand and thereby drove up supply. Florida, Vegas and Arizona markets were hot retirement markets for ten years before the downturn. Maybe that's what helped fuel the speculation/easy credit and brought out the speculators. Anyway, the markets you named as the worst markets all suffered from easy credit, speculation and over-building. That means prices will be flat for awhile as all these houses are absorbed. Today, retirees are shopping and buying again, but there is a huge hole to fill in those markets of surplus properties. Meanwhile, there is a new interest on the part of retirees to seek out undiscovered locations. Not everybody is headed to Naples or even Florida or Arizona....in fact, Florida has been struggling to attract as many retirees each year as they had in the past. Retirees are looking to make their nest egg last and often, it's places like Huntsville, AL or Greenville, SC or Fredericksburg, TX or Chattanooga, TN that are offering great, fun lifestyles at a lower cost. That's my take. Dan"
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FROM: Dan Rexford • "Don't disagree, Dan. I think the takeaway for me is that building for retirees isn't an economic development panacea. In fact, it isn't even close to a sure thing for a single project let alone a town. There is no question that this age cohort is an economic powerhouse but each project and initiative must stand on its own. Although I haven't seen any research, I suspect that these areas began to struggle when they adopted a "build and they will come" strategy rather than understanding that you still need to inspire people to buy."
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FROM: Dan Owens • Dan, I think the key element is that each project does need to stand on its own. However, there is a broader argument that housing. States like Mississippi, Texas and Tennessee are now funding statewide efforts (google Down Home Mississippi, GO TEXAN and RetireTennessee) to attract retirees to towns in their state. The fact is that over 70% of all financial assets are controlled by folks over age 50. So, for many towns that are struggling to attract jobs and also have flat tourism, a retiree attraction program is another avenue whereby spending and economic activity can be generated. Studies have shown that a typical retiree couple can generate the equivalent of between 2.8 - 3.7 manufacturing and industrial jobs. So, the money spent on furniture, property taxes, cars, landscaping, restaurants, healthcare and pharmacy, religious and civic contributions, utilities, retail, etc. help support business and government. And, since no kids are involved, they don't tax the most expensive endeavor...the school system. Experts have said that the only newcomer into a community that doesn't actually cost the town/city/state money in services are folks who are 60 and retired or semi-retired. Millions of boomers are turning 65 and a number will be looking for a place to improve their lifestyle. This is the kind of discussion that our panel of experts likes to have at our annual NARA Business Conference. See www.retirementlivingnews.com"

END OF DISCUSSION (FOR NOW) Join our NARA LINKEDIN GROUP by clicking on:
http://www.linkedin.com/groups?mostPopular=&gid=3036136