Living Well in Retirement
Caught in a Housing Crunch
Retirement communities offer special deals to seniors who face a tough time selling their homes.
By Kathryn A. Walson, Staff Writer, Kiplinger's Retirement Report
May 4, 2009
Advertisement
EDITOR'S NOTE: This article was originally published in the March 2009 issue of Kiplinger's Retirement Report. To subscribe, click here.
After 37 years in the same house, Burt and Peggy Schimpke were ready to move. "We decided it was more than we wanted to take care of," says Peggy, 83. The couple had their sights on Fox Run, a continuing care retirement community in Novi, Mich., 11 miles from their home outside Detroit.
There was one problem: The housing market was in the doldrums. If the couple couldn't sell their house, the Schimpkes couldn't afford to move. "We figured we wouldn't get a better offer if we waited," Peggy says. They put their house on the market in August 2008 and put a deposit on a two-bedroom unit at Fox Run.
Fox Run is one of more than 20 campuses operated by Baltimore-based Erickson Retirement Communities. Hoping to keep a prospective resident, Erickson put the Schimpkes in touch with a real estate agent, who sold their home in December. Peggy says the agent posted photos on the Internet and "staged" the home, removing wallpaper and rearranging furniture.
Erickson covered $500 of the moving fees and reimbursed $2,000 for packing and unpacking services. "It made for a very easy move," Peggy says.
As the recession deepens, many seniors who planned to move into a retirement community are finding it tough to unload their houses. Partly as a result, some communities are experiencing sagging occupancy. A credit crunch is forcing some developers to call off planned projects. Others face bankruptcy.
For retirees, there's a silver lining to the housing downturn. They can find bargain prices in many retirement communities, such as those in hard-hit Florida and Arizona. And many developments are going all out to entice prospective residents.
Before you sign on, check into the financial stability of the housing company. "Now is the time to err on the side of more due diligence," says Eve Stern, president of SnapforSeniors, a Seattle-based company that runs a database of licensed senior housing in the U.S.
The measures you take to finance a new home depend in part on the type of senior housing you intend to move into. At many active-adult communities, you buy your new house. With assisted living, you pay only a monthly fee, ranging from $4,000 to $6,000.
Continuing care retirement communities, which provide a range of care from independent living to nursing care, work two ways. In some cases, you buy the unit. But, typically, you pay an "entrance fee" of up to a half-million dollars as well as a monthly fee.
Residents usually sell their homes to finance a new house at an active-adult community or a CCRC entrance fee. Residents in assisted living can finance monthly fees with proceeds from the sale of their house or scrape together investment income and Social Security, veterans and pension benefits.
Drive a Hard Bargain
In an attempt to bolster occupancy, many communities are giving discounts and offering prospective residents more time to sell their houses. They're also arranging temporary financing so residents can move in while their houses are on the market.
Consider ACTS Retirement-Life Communities, a West Point, Pa.–based firm that runs 19 CCRCs in six states. Michael Smith, director of public relations, says all ACTS communities have waiting lists except for five communities in Florida's Vero Beach and Boca Raton.
Last June, the company started offering incentives to people who wanted to move into those five Florida campuses. "People are having trouble selling their homes," Smith says. "In this housing market, we want to do everything we can to help them move in."
ACTS's entrance fees range from $92,246 for a studio to $274,851 for a three-bedroom apartment. ACTS is offering a three-bedroom apartment for the price of a two-bedroom unit and a two-bedroom for the price of a one-bedroom. The company is also giving residents up to a 12-month extension on the final entrance-fee payment with no interest, as long as they have paid one-third of the fee. And the company will cover up to $5,000 of moving expenses.
In fall 2007, Erickson launched Erickson Realty and Moving Services in Detroit. The service, which has since expanded to all Erickson communities, includes a personal moving consultant. "We've been able to help folks sell their homes on average 33 to 35 days faster than the typical house in that particular market," says Donna Samulowitz, Erickson's chief marketing officer. "We will even hang pictures on the wall," she says.
In one case, Erickson gave a $5,000 discount to an incoming resident who had received a less-than-appealing offer on a home sale. Erickson also repaired the sidewalk in front of a prospective resident's home so the house would sell faster.
Seniors who move to one of Emeritus Corp.'s assisted-living centers could get a break on upfront fees. "If people press a little bit on the upfront fee, operators will reduce or even waive the upfront fee," says Granger Cobb, chief executive officer of the Seattle-based company, which runs 250 assisted-living facilities.
Reader Comments (2)
Posted by: tampanative at 05/06/2009 09:16:16 AM
Our community has definitely seen a hit to the housing market so many of our retirees aren't able to move in to retirement communities (like Tampa's www.UniversityVillage.net). It's a tough time for everyone but hopefully we'll see an upturn soon.
Posted by: floridatransplant at 06/21/2009 07:53:48 PM
Active adult communities in FL are very expensive living. Especially if the developer still owns them. My maintenance fee is now $3600/year (a $1400 increase in 4 years), my water has increased in price by 48% in the last three years. They sell it as the Florida life style. Let me tell you it is really a cash cow for the developer. If you are a single women and (on) a fixed income, look elsewhere.