It’s no secret that the housing market is currently in a downturn pattern. Seniors and the senior housing market are suffering the long-term effects. Homes are not selling quickly, and if they do sell, the selling price is not what the senior had planned when they were mapping out the next phase of their lives. Therefore, seniors who are counting on their homes as a source of wealth and need the money from the sale of the home to afford a senior living facility are stuck in their homes. Next to accrued Social Security benefits, housing is the single greatest asset for people age 60 to 70, making up 22 percent of their total wealth and outweighing investments and pensions that have suffered because of the economy (Center for Retirement Research)
"Often, people’s largest asset is their house, and to the extent the house isn’t selling or it’s selling for less, that naturally puts pressure on the ability of seniors to move into retirement communities," says Michael Hargrave, a vice president at National Investment Center for the Senior Housing and Care Industry (www.nic.org)
. "When it takes a year to 18 months to sell a house, that’s a deterrent."
Safety then becomes a big concern for the senior and their families. Seniors at this stage are looking, and very likely needing, to live in facilities with assistive services to help with Activities of Daily Living such as bathing, dressing, and cooking. Their own homes may not be equipped with assistive devices such as handrails along hallways or in the bathrooms.
At 93, Sylvia Merlin, lived a modest life and has recently seen her portfolio drop $200,000 in value. She is on oxygen now and finds it hard to get around her fifth-floor apartment.
“I’m going to be 94, and I need help,” she said. “Making the bed is difficult. I need a little help taking a shower. Those things are difficult. I was a great cook, but I really don’t cook anymore.”
No one has made an offer on her condominium, and Ms. Merlin said the retirement home had refunded the $1,000 deposit on the $130,000 unit she hoped to buy. Now, instead of moving, she said she has decided to stay.
“I just couldn’t go anywhere until I sold my apartment,” she said. “A lot of us oldsters are stuck.”
This can make the adult children of these seniors very distraught about their parents’ situation. Financially, the children may need to contribute, making matters even more complicated.
Even if seniors are just at the point where they want to downsize, the housing market is dictating what their futures will look like. The combination of time on the market and ultimate selling price of a property determine when and where seniors can afford to live.
The "housing crisis has kept thousands of older Americans who need support and care from moving into retirement communities or assisted-living centers, effectively stranding them in their own homes," the New York Times
reports. Even after a lifetime of saving, many older Americans cannot afford to put a down payment on a residence in a retirement facility of any kind if their homes do not sell. The upfront cost can be anywhere from $100,000 to $500,000 to move in.
For Ruth Scher, 85, selling her home is a critical first step before moving on. Ms. Scher put her two-bedroom condominium on the market a year ago, but no one has made an offer.
In the 34 years since she moved to South Florida, Ms. Scher’s husband has died, her siblings who moved south from New York to join her have died, and her friends have moved away. She is recovering from a fall that broke her clavicle and suffers from arthritis in one shoulder, and she says it is time to move back to New York where her children live and where she has friends.
“It’s lonesome,” Ms. Scher said. “So many other people have passed away or moved away. It’s very lonely. The children would love me to come up and I would love to, but I just can’t sell.”
Ms. Scher hoped to move to a retirement community. But in the year her home sat on the market, she could not even find a broker willing to sell the property, she said. She finally de-listed her condominium.
“They tell you, ‘We’re sorry, we can’t get any people to come and look,’” Ms. Scher said. “If I can’t sell here, I can’t go nowhere.”
The senior housing industry also sees this situation as a growing problem. Senior living facilities are watching their occupancy numbers deteriorate, leaving vacancies like never before seen. They are forced to find ways to introduce seniors to their properties by proposing unprecedented move-in specials.
New incentives offered by senior living facilities
In response to this issue for seniors, and to relieve their own vacancy concerns, senior living facilities are getting creative and providing move-in incentives.
Some facilities are offering to buy people’s homes. Since 2008, Brookdale Senior Living, which is based in Brentwood, Tennessee and operates 13 continuing care retirement communities around the country, has signed contracts of this type with seniors. Brookdale promises to buy seniors’ houses at predetermined prices within eight months if the house doesn’t sell. Out of 400 of these deals, Brookdale has had to buy fewer than 100 homes, most of which have been resold.
Facilities have hired real estate agents to assist prospective residents with selling their homes, and they have even worked with banks to develop programs that "provide bridge loans to homeowners, or are discounting apartments and offering low-interest loans," according to the New York Times.
The Cedar Community, which provides a range of housing for the elderly in West Bend, Wisconsin, has seen independent-living occupancy rates drop by 4 percent this year. There were so many people waiting for their homes to sell that the facility decided, in some cases, to let new residents forego the facility’s standard entry deposit and pay month-to-month until they could sell their houses. At that time, the proceeds from the sale of the home would go toward the entry deposit.
These creative funding mechanisms are focused on attracting residents with the hopes that both sides will reap the benefits. It remains to be seen how effective these methods are for the facilities and the seniors in the long term.
Thinking outside the traditional retirement community
Seniors are finding options other than buying into retirement communities, such as Cooperative Housing and Share Housing. These alternatives provide seniors with viable options that are cost-effective and provide the much-needed care and social support that seniors are looking for in the traditional retirement community.
Cooperative Housing – This is communal-style living for seniors over 55 years of age. Living arrangements vary depending on the facility. Typically, residents enjoy the privacy of their own bedroom and bathroom while sharing the kitchen and living space with a small group of seniors. Cooperative housing brings seniors together and provides them with daily opportunities for socialization with fellow housemates.
Share Housing – Home sharing is a unique program that matches seniors and adults who want to remain in their own homes with individuals who are in need of housing.
Certain organizations (see the side bar for a list) help seniors find the right residential opportunity in specific communities. They help match seniors and their care needs with the appropriate living situation, services, and roommates.
Seniors of all ages are now reconsidering plans for retirement living because the money they expected to garner from the sale of a home is not a certainty in today’s economic times. As senior living communities are trying to address this need with creative funding methods, seniors are attempting to figure out the best avenue for living based on available resources and care needs.