Baby boomers are just starting to hit retirement age, and recent analyses of retirement hot spots explain the appeal of some lesser-known hot spots for seniors.
Not surprisingly, Florida appeared prominently on the latest RealtyTrac list of the top 15 retirement hot spots, along with Arizona and California, states where major home builders have homes for sale. But a few cities popular among retirement-age Americans could prove to be hidden gems, said Daren Blomquist, vice president of RealtyTrac.
Hot Springs, Ark. and Florence, Ore., for instance, make RealtyTrac's list but appear to be getting little attention from major home builders such as Toll Brothers (TOL), KB Home (KBH), PulteGroup (PHM), DR Horton (DHI) and Lennar (LEN). None of those builders have homes available in Hot Springs, for instance. And of those five builders, only three, PulteGroup, DR Horton and Lennar, have a presence in the state of Oregon, according to analyses by "Big Data Download."
"These builders tend to focus on the big markets with a lot of population moving there, and Hot Springs, Arkansas showed up on our list because it does have a high population of retirees but it's probably not attracting retirees from across the country. It's more of a regional retirement hot spot," Blomquist said.
But real estate investors may see the appeal of these smaller retirement destinations.
"When we look at the numbers there, appreciation is strong, [and] you can get a fairly decent capitalization rate when you rent a home in Hot Springs, Arkansas, and so it would make sense,” he added. “But it may not be a great play for some of these builders because just the population that's moving there is not in the volume that you're seeing for places in Florida and Arizona and even California.”
RealtyTrac looked at cities where more than a third of the population were retirement age or older based on U.S. Census data, then sorted for home prices, weather conditions and cost of living.
Average home prices ranged from about $77,000 in Dunnellon, Fla. to $953,000 in Easthampton, N.Y., according to RealtyTrac data.
Most cities on the list appeared to have temperate weather, with nine of the 15 cities on the list with average temperatures in the 70s.
Notably, Florence, Ore. was the only city on RealtyTrac's list with a cost of living below the national average. That city's cost of living index was 99, where 100 represents the national average.
And homebuilders appear to be catching on to the appeal that Oregon has for retirees.
"If you pull back and look at the state numbers, Oregon still as a whole had a 47 percent [growth] in new building permits from the previous year and that's almost the same as Florida, which had a 48 percent increase. So I think homebuilders are seeing the Oregon market at least as a whole as a great place to build in the future," Blomquist said.
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