This is the first of a three-part series on high-rise demographics. In this first part, I’ll cover how resident age, personal finances, and cognitive decline form an intersection that should help buyers better understand a high-rise. These factors are certainly in play in all neighborhoods, but the communality of high-rises makes them more acute. After all, when talking about single-family homes, a neighbor’s leaking roof has no impact on your home a block away.
According to the US Census, the age distribution in Dallas is such that 62 percent of residents are in their home-buying years. The remaining 38 percent are under 24 years old and, aside from trust fund babies, unlikely to be buying real estate.
In Dallas, 9 percent of the population is over 65 years old, empty (or never) nesters with many looking to downsize from suburban family factories to a smaller, more urban, lower-maintenance existence. It’s the “oh crap, the kids are gone – I need SOMETHING to do besides Applebee’s and a movie” syndrome. Otherwise known less charitably as, “the skid mark to Sparkman.”
And then there’s the largest demographic with ages ranging from 25 to 64. This is a big bucket ranging from “starter home” to “forever home” to “next forever home” to empty nest downsizers. Being the largest and most mobile, it’s also the most active in terms of buying and selling.
Since leaving college 30 years ago, I’ve lived in nine homes in five states, (ten/six, counting my second home). All except Dallas were forced career moves. That kind of movement places me clearly above the average (but you suspected that all along, right? 🙂 ).
Let’s get this out of the way first. Generally speaking in Dallas, the newer a building, the younger its population and the closer it gets to the general Census age distribution. HOWEVER, many of the newest buildings have large numbers of unsold, developer-owned, rental, or second home owners which makes their actual demographics harder to quantify.
In the graph above, Soco Urban Lofts — with seemingly the youngest population in Dallas — has just 59 percent claiming the property as a primary residence. That leaves 41 percent of ownership unaccounted for. These units are more likely rental units whose tenant age range is equally likely to be similar to its homestead ownership. However, the age and ideology of the actual owners of the 41 percent may be significantly different. Compare that with the Park Plaza, which sports Dallas’ highest proportion of over-65 year olds with just 13 percent non-homestead ownership. It’s more likely these 13 percent are owned by fellow seniors who claim another residence as their primary.
FYI: How do I know the ages of owners? The Dallas Central Appraisal District (DCAD) provided me with the information on how many owners in each Dallas high-rise filed Homestead exemptions on their taxes and how many also filed “over 65” exemptions.
Large numbers of rental units within a condo complex can lead to problems with tenants who have no sense of ownership and can make lousy neighbors. Also, the mindset of an investor may be very different from an owner’s, which may cause problems when big ticket maintenance votes come up.
One reason Dallas high-rises skew to older residents is because, unlike New York or London where families with children routinely live in high-rises, Dallas is dominated by its suburbs. That’s because, like so many other cities that hit puberty after the automobile, Dallas maintains the stereotype of the suburbs being the perfect child-rearing environment. They with their manicured yards on artificially architected cul-de-sac’s oozing banality. The 100-acre corporate compound being built by Toyota only extends the metaphor further away from Dallas’ urban core. Certainly all large cities have suburbs, but more mature cities also have vibrant high-rise family living.
Another part of the explanation is cost. Many high-rises are too expensive for (younger) middle-class buyers – especially if there are young mouths to feed. Take these two examples. Family-builders are much more apt to snap-up this 2,233-square-foot, single-family home for $225,000 than this 1,154-square-foot, ground-floor condo for $249,900 and $625 in monthly HOA dues.
The uninitiated may also think that high-rise density equals noisy neighbors – but 6” of concrete deadens most anything — especially compared to poorly sound-proofed townhouses with “sticks and bricks” construction.
Intangibly, the young also have an image to maintain that makes having neighbors their parents’ or grandparents’ age difficult to swallow. Personally, I’ll take grandma any day over howling kids or yappy dogs. My high-rise mantra is, “I don’t care as long as I don’t see it, hear it, or smell it.”
Because of these factors, Dallas high-rise residents are generally much older than the general population. Even in buildings with the youngest populations, residents are much more likely to be either childless pre-nesters or never-nesters.
Why all this interest in resident age? Because along with owner finances, I feel they’re two important indicators of how well a building operates. Sure, things like location matter, but with high-rises tending to be grouped together, vastly different buildings may be a few feet apart. To illustrate my point, here is the tale of two buildings …
Building one: WTD (Waiting to Die). Overwhelmingly high ratio of over 65-year-old claiming homestead status. For many of these residents, their home is their largest asset with many relying on fixed incomes and caretakers. Combine a building’s average age and primary residence ratio data with unit prices. If it’s a building with lower-priced units, it is likely owners’ financial wherewithal is limited when compared with buildings with high-cost units. Of course this isn’t 100 percent accurate, but it paints a picture of their ability to absorb unexpected financial blows.
Owner finances (especially those with finite dollars to last an indeterminate amount of time) will color owners’ attitudes on building maintenance and improvements. Coupled with an age-related aversion to change (something we all must contend with), progress is difficult. Expenses, planned and unplanned, are fearful. And it’s likely we’ll all face some level of cognitive decline that will take its toll on learning and decision-making.
This building grinds along incrementally, concerned about maintaining the past and the present while often ignoring the future. Despite many positives, its values have bobbled within the same range for well over a decade. Only now, in Dallas’ hottest market, is the building finally returning to pre-recession prices.
It’s a double-edged sword of personal economics paired with age-related cognitive decline and a shortening life “runway” (and its associated personal world-view).
Building two: This building has an age distribution not unlike building one. However units cost more with a far wealthier ownership, many of whom own multiple homes and no pressing money shortages. This building contains a more active and vibrant population partly buoyed by their wealth. If something needs to be done, there are enough of them to see that it’s done. Certainly there are those with cognitive and financial concerns, but the majority of residents understand the building will outlive them and that they need to make sure its future is secured with maintenance and thoughtful changes.
Make no mistake, building two is not nirvana, but it’s at the other end of the spectrum from “building one” in forward-thinking and openness to ideas. And because of this, the building is better maintained and always open to improvement – an attitude that has helped values grow well above market norms.
For example, when presented with information to purchase building-wide internet at drastically reduced prices, building one let the idea die. Building two discussed the option, got prices and within a few months had signed a contract.
Conclusion: One measurement for high-rise ownership peace of mind is to plot a course to the high-rise with the residents matching your financial doctrines with your physical and mental age. It’s much like buying the best house you can in the best school district. But with one key difference. If a buyer has much lower financial resources in a building populated with much wealthier neighbors, their threshold to special assessments may be lower, which could be financially painful. The reverse is also true with wealthier buyers wanting to change things that poorer neighbors will thwart.
In a house, if an owner doesn’t have the money, they just put a bucket under a leak. A wealthier owner will just replace the roof and be done with it. Either way, it’s the owner alone who controls the decision. In a high-rise, it’s cliques and majorities that, right or wrong, plot the course.
For those with the guts, patience and actuarial tables on their side, aim for the bargain in the building with the oldest WTD population. The first few years will be rocky (to say the least), but as I’ve said before, time is on your side.
The other option is to purchase in the newest buildings where initial maintenance will be lighter and so decisions financially small. As with any structure, the older it is, the more things need replacing. The ultimate point is that you want to live in a building where the correct, long-term decisions are made for maintenance and marketability.
Stay tuned. Next week I’ll continue by listing and discussing the buildings with the youngest populations before I end the following week with a list of Dallas’ oldest.
Remember: Do you have an HOA story to tell? A little high-rise history? Realtors, want to feature a listing in need of renovation or one that’s complete with flying colors? How about hosting a Candy’s Dirt Staff Meeting? Shoot Jon an email. Marriage proposals accepted (they’re legal now). firstname.lastname@example.org