Housing Market

Seniors strained by conflicting forces in the nation's housing market.
Many pinched between falling home prices and increasing costs of care.

By Grant Milne

Older Americans looking to cover inflationary long-term care costs with home equity face increasing uncertainty as the two take divergent paths.

According to the latest Case-Shiller index, considered the nation's most reliable measure of home values, existing home prices in July were down nearly 20 percent from their peak in July 2006. In contrast, the average assisted living costs for 2008 increased 13 percent in the two years since they were last measured, according to a recent report from Prudential.

"A lot of seniors bank on the value of their homes to cover their future care needs, so there is a very real fear about the market's current situation," said Seniors Real Estate Specialist and Certified Senior Advisor Judy D. Wright. "I see some waiting it out and hoping for the best, while others choose to sell now because they want to move on their own terms, not as dictated by their health down the line."

The National Association of Realtors reported that while July existing single-family home sales rose from a 10-year low in June, they were still off 13.2 percent from 2007's annual pace. With once-escalating senior housing occupancy rates down year-over-year, it appears older Americans may be amongst those rendered inactive by the languishing market.

But delaying a move is not without risk. Wright tells of clients whose carefully-laid plans have been derailed by the protracted housing downturn.

"[One client] chose a senior living community she loved, but decided to wait until she was able to get more for her home," said Wright. "Unfortunately, lack of market recovery and increasing costs have pushed that option out of her price range and forced her to reconsider her plans."

The prospect of hiring a home health aide can also prove prohibitively expensive for seniors whose assets are mostly tied up in their home. And for those who are simply looking to wait out the bad market, borrowing against their equity to pay for interim care may not be attractive.

Unfortunately, home values appear likely to get worse before they get better. David M. Blitzer, chairman of the Index Committee at Standard & Poor's, said the Case-Shiller figures provide "no evidence of a bottom."

In this uncertain environment, many Americans look to alternative financing for their care needs. Jim Novak, founder and president of Novak Financial Group, explains that seniors have options in protecting themselves against an ailing housing market.

"Creative financing solutions such as reverse mortgages can be a great help to individuals whose home equity comprises the majority of their assets," Novak said. "There are a number of options and considerations unique to seniors, so it is extremely important that they get help from a strategic financial advisor who specializes in senior finances."

According to Novak, advisors who have earned the Certified Senior Advisor designation are much more likely to be well versed in the financial issues faced by older Americans. He cited the U.S. Department of Housing and Urban Development's website, www.hud.gov, as a good resource for learning more about reverse mortgages.

"Everyone's situation is different, so unfortunately there isn't a one-size-fits-all solution," Novak said. "Well-meaning but uninformed advice from friends and family can lead you in the wrong direction; luckily expert guidance is available during these difficult times."

The following is a list of resources for those faced with decisions about senior-specific financing and housing, or the transition from the home to long-term care:

SNAPforSeniors ( www.snapforseniors.com)
A listing service which provides free access to a current and comprehensive database of all licensed senior housing communities in the nation. Many community listings show pricing as well as payment types accepted (such as Medicaid). SNAPforSeniors is not a placement or referral service.

The Society of Certified Senior Advisors ( www.csa.us )
A multi-discipline group of professionals who have earned the Certified Senior Advisor designation through specialized education. Includes financial advisors, doctors, attorneys, realtors and other professionals.

Seniors Real Estate Specialists ( www.seniorsrealestate.com)
A designation offered by the National Association of Realtors to agents who specialize in senior real estate services.

The National Association of Senior Move Managers ( www.nasmm.org)
A group of professionals who specialize in facilitating a smooth transition for seniors moving from the home into a senior housing community.

The National Academy of Elder Law Attorneys ( www.naela.org)
An association of attorneys in the private and public sectors who deal with legal issues affecting seniors.