Will You Be Able to Move Down to Another Home?

Although the Joint Center for Housing Studies at Harvard University predicts, at least for now, most middle-aged boomers and older seniors will remodel their homes and stay in them as long as possible—known as "aging in place"—eventually the burdens of dealing with a too-big house and yard become too much.

That's when it's time to move to a smaller, single-level home, or an elevator-accessed unit close to transportation, restaurants and other walkable amenities.
The problem is, that's the sort of housing also coveted by the one demographic cohort that's larger than the boomer generation—the echo boomers, who are now in their 20s and just entering the housing market.

The center notes that in 2007, one in three households in the 65 to 74 reported having moved in the prior decade, and that "if the older baby boomers match this mobility rate, some 3.8 million would downsize their homes over the coming decade, lifting the demand for smaller units."

Of course, if you don't want to compete with your children or grandchildren for that sunny two-bedroom down the street from the Starbucks, you can always opt for an age-restricted community. And these often do have the advantages of nearby services targeted just for seniors on site nearby, like recreation centers, doctor's offices and convenience stores.

But if you still want to live in a neighborhood where all ages are represented, then perhaps you should start looking now, while it's still a buyer's market.

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Will You Be Able to Sell Your Home?

There's been a lot of press lately on the so-called "shadow inventory" of foreclosed homes being held by banks, who are waiting for a better housing market to release them. Some economists fear that when these finally go up for sale, the added supply will depress home prices, which have already taken big hits over the last few years.

Should we also worry about a "shadow supply" of housing being held by middle-aged boomers and older seniors?

After all, unless there's a medical issue or financial emergency involved, most boomers and seniors don't have to move. Many bought decades ago when prices were much lower, and have low-or-no mortgages, so they've built up substantial equity. Rather than risk that nest egg, is it likely that these would-be sellers—who represent a huge segment of homeowners-- will wait until the market

improves before listing their homes? And if they do, will this added supply depress home prices?

Fortunately Christopher Herbert, director of research at The Joint Center of Harvard University, thinks that's unlikely, largely because the current housing market is so tempting for buyers. "While they may not be able to get as much for their homes as they may have thought possible a few years ago, they also have the opportunity to buy homes at low prices."
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Nevertheless, if you're in one of these age groups and you do decide to sell your home now, remember that when you move down to a cheaper house, you lose some of your purchasing power, even if the percentage lost on both houses is the same. That is, if you knock off 10% from a home selling for $900,000, you're giving up $90,000. If you then buy a home that's discounted 10% from $400,000, you only gain $40,000. So there may be a benefit in waiting to sell, assuming you expect the housing market to start to recover in a year or two (many economists do).

Otherwise, you may want to look into other options for tapping into your home's equity, such as a reverse equity mortgage, a cash-out refinance or a charitable home remainder annuity. But be forewarned: among other potential drawbacks, these all will affect what you are able to leave your heirs.

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Sell or Stay? The Coming Competition for Senior Housing

Empty nesters and seniors need different types of housing as they get older. If you are in one of these age groups, you may be wondering: With the economy still not recovering as quickly as everyone had hoped, will you be able to sell your current home for as much as you want? And will you be able to find another home that suits your needs?

It may be tough. A June 2011 report by The Joint Center for Housing Studies at Harvard University expects both boomers and seniors to have a huge impact on the housing market in the coming decade, largely due to demographics. Boomers comprise one of the biggest generations in history, and will push up the number of households between the ages of 55 to 74 by 10.2 million from 2010 to 2020. Meanwhile, during the same period, the number of households over age 75 will jump by more than two million.

The center expects most of this aging population to "age in place"—that is, remodel and not move. But eventually, most people aren't able to handle the big homes where they raised their families, which means moving to a smaller place; an active-adult, assisted living or continuing care community; or a nursing home.

Some of this population is already on the move—Christopher Herbert, the center's director of research, told AgingCare.com that there was a larger jump in the share of households aged 65 to 69 moving in 2010 from the previous year than for any other age group. That's one reason why when the time comes for you to take the next step, competition to sell—and to buy—may be fierce. And some of it may even be coming from an unexpected source: Your own children or grandchildren.

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Why Renting May Be Better than Buying for Seniors

Charlie and I moved to our senior retirement community four years ago. At the time we had every intention of purchasing the two-level condo as soon as our property in western New York sold.

In the meantime, we were renters with an option to buy. Now, four years have passed, our property sold long ago, and we have become comfortable with being renters.

But, Charlie being Charlie, has become obsessed with the idea that we should buy our condo.

Yes, the rent is high, but whenever an appliance dies it's not our problem – and several have bit the dust since we moved here. When the plumbing fails, we don't have to call the plumber – not our problem. If the air conditioning quits on a 98° day – the company has to deal with it, not us. When the roof needs replacing (the roof is twelve years old and due) the association will be responsible.
There is a lot to be said for renting, especially for senior citizens.

At least once a week Charlie tells me we should talk to the owners about buying our condo. I keep making excuses and putting him off. He just doesn't understand that becoming new property owners at age 79 and 77 really doesn't make too much sense. Something could happen to either one of us at any time and that could mean a long-term care facility of one type or another for one or both of us.
Senior living options are a difficult decision for the elderly. There are so many things to consider, not the least of which is finances.

Ideally, if and when we leave here, we will be able to buy into a facility in the area with extended care options, but we aren't ready for that at this point. However, it is unrealistic for us to think that neither of us will, at some time, require this type of care.

Many condos in our retirement community are currently for sale as the owners have moved on to extended care facilities. And the problem is, the places are not selling. So it really doesn't make any sense for us to buy our condo knowing that sooner, rather than later, we would probably have to sell it and move on.

How do I get this across to Charlie? I don't. I just keep trying to ignore the issue!
As you or your loved ones, face a similar decision, try to look at the long-term problems. Nothing lasts forever. Hopefully, you will be able to make a decision that is in your own or your loved ones best interests.

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