The 24 million Pre-Boomers (currently 58-67 years old) and 38 million Early Boomers (currently 48-57 years old) who are currently retiring or planning to retire in the next decade have some common characteristics that will help shape the future of the housing industry. These characteristics are briefly summarized later in this article and more thoroughly in a report I will be releasing in June.

Selling homes to these two generations will be relatively easy since they have a high propensity to move and they have more wealth than any generation before them. However, making money will be the challenge, because these groups are savvy buyers, they are skeptical of promised amenities and they demand exceptionally high customer service. While the emphasis to date has been on capital intensive, resort-style communities designed by marketing-oriented companies, I anticipate that a growing number of retirement communities will offer fewer amenities and focus on smart home design, cost-effective marketing techniques and a solid return on capital.

Marketing Information Overload
My goal is to help builders determine the values and lifestyles of the greatest number of individuals who will be attracted to their communities, so they can:

• learn more about the opportunities in their area
• market their projects to the groups most likely to buy their homes, even if these communities are not age-restricted, and
• sell more homes by giving their salespeople more insight on the life experiences of the individuals walking through the front door.

Most of my research efforts on this project have consisted of pouring through the wealth of available information on marketing to the generations who will be retiring over the next decade. I have summarized thousands of pages of third-party research by the AARP and others into 40 pages of the Sales and Marketing analysis that I believe will be most applicable to home builders.

Shared Life Experiences
I have segmented this decade's retirement housing buyers into two generations:

1. Pre-Boomers: The Pre-Boomers are the 14.3 million households headed by someone born between 1936 and 1945, which means they are currently 58-67 years old. These 24.2 million people are also known as "The Lucky Generation" because they were too young to serve in World War II and the Korean War, and too old to serve in Vietnam. They also entered the job market at the beginning of a 20-year economic boom. They had little competition for jobs, housing and education, unlike the Boomers who followed them.

2. Early Boomers: The Early Boomers are the 21.3 million households (50% more households than the Pre-Boomers) headed by someone born between 1946 and 1955, which means they are currently 48-57 years old. These 37.7 million people represent 46% of the 83 million Baby Boomers. They have already redefined music, religion, leisure, workforce composition, workforce productivity and American norms and values. They will also redefine retirement housing.

The following is a very brief summary of my thorough analysis of the "Generational Markers" of this decade's retirees, including the political, social, economic and cultural conditions that helped shape who they have become.

Buyer Segments
Obviously, the generational experiences of the Pre-Boomers and Early Boomers are tremendously different even though they were born only ten years apart. Additionally, there are many segments of buyer profiles within each of these generations. I looked deep into Claritas' 64 psychographic clusters to determine who the retirement home buyers will be. I have identified eleven categories that comprise approximately 67% of the households retiring over the next 10 years. Retirement households are segmented as follows:

The descriptions of these categories are both accurate and amusing and can be reviewed at Claritas' Web site, where you can also find information to purchase this data in your market for a few hundred dollars.

One of the categories familiar to most builders is called Winner's Circle, which consists of 1.2 million households aged 55-64 and earning over $90,000 per year. This group is highly competitive. They want the nicest home in the neighborhood, and they'll flaunt it. They play golf and tennis as much for the competitive aspect as the recreational aspect. They own Palm Pilots, drive luxury automobiles and travel. They buy the best upgrades and are excellent candidates for new retirement homes. They may buy their retirement home several years before retirement because they have the means to do so, and they may even buy two retirement homes.

Conclusions
The home building industry has ridden the Boomer wave of housing demand, from entry-level homes in the 1970s and 1980s to move-up homes in the 1980s and 1990s, by designing homes and communities that were far better than those built in prior decades. The Retirement housing boom, which won't decline until the last Boomer turns 65 in the year 2029, will be where we make the most money over the next 26 years.

Next column: Design

About the AuthorJohn Burns publishes three free Building Market Intelligence e-mails each month: U.S., Local and Strategic. He helps real estate executives develop and execute strategic plans, conduct market research and maximize profitability. More information is available at www.realestateconsulting.com.