Why are 55 and over Communities cheaper?

Question

i understand they are deed restricted so that is one reason they are cheaper  on resale but is there typically Government Money or Tax Breaks that allow them to build them cheaper in the beginning?  They are typically 30-50% cheaper in my area.  Just curious.

Evan Wiesner · Answer

@Warren Lanza the short answer is that there's a limited buyer pool. Almost anytime in real estate you limit the available or interested buyers your value decreases.

In my experience the 55 and older communities are dangerous investments because the buyers are not only limited, but they don't always seem to buy under conventional thought processes. We've had the nicest property, in the best location, and at the best price, and have watched many other properties sell instead because of the "feel" of the property. This is less of an issue when the pool of buyers isn't restricted because someone always seems to like how our remodels work out. That's not to say that you can't make great money investing in them, but I'm always more diligent when deciding to pull the trigger.

Russell Brazil · Answer

Like @Evan Wiesner it is the limited buyer pool. It is a simple case of the economic concept of supply and demand. By limiting the pool of buyers you severely limit demand, and with less demand comes cheaper prices.