As a former real estate broker and current consultant to the Senior Services division of a large, local firm, I find seniors often seek my advice as to the advisability of making a move in today’s housing market.
While individual circumstances vary and will affect your decision, in general, prices have declined far less in Connecticut than in many other areas of the country.
There was a dramatic increase between 2000 and 2006 (known as a bubble) and certainly prices are adjusting from unrealistic highs, which occurred when the sub-prime market enabled unqualified buyers to enter the marketplace. Despite that, the return on investment in housing has still been better in the long run (over the past eight years) than the stock market.
For seniors who are considering a move because their present home no longer meets their needs, or because they are looking for a change of scenery, an easier lifestyle, have health considerations or wish to be closer to their families, waiting can be detrimental.
The decline in prices seems to have flattened and many financial experts are advising buyers to enter the market now. Money magazine in May advised setting an asking price at 10 percent below what similar homes have been selling for, in order to attract buyers and sell more quickly.
Homeowners who have lived in their home for 20 or more years will still be able to walk away with a healthy profit. The Washington Post in a recent issue suggested that when coming down in price, an owner should take a big bite, not a bunch of nibbles.
As to any kind of an upswing, many pundits doubt it will occur before 2012, certainly too far in the future to put one’s life on hold. For seniors who are in good health and confident that they will be able to remain in their homes for at least 10 years or more but are having trouble meeting running expenses, a reverse mortgage might be a consideration.
However, upfront costs to this product are exceedingly high and because they are a moneymaker for the mortgage companies, some firms are currently using high-pressure and scare tactics to entice seniors.
I have personally received several objectionable e-mails of this nature. Simply stated, a reverse mortgage is a loan against your home that you do not have to pay back as long as you live there. It must be your principal residence, you must own it and also be 62 years of age or older. You are still responsible for property taxes, insurance and upkeep.
With a regular mortgage, you have falling debt and rising equity. With a reverse mortgage, you have rising debt and falling equity, but you are able to use the already accrued equity in your home for living and other expenses.
Careful study and, perhaps, consultation with your hometown bank, is needed before deciding if this type of mortgage is the right option for you. For additional consumer information about reverse mortgages, visit the nonprofit National Center for Home Equity Conversion at www.reverse.org.
Jean Cherni
is founder of Senior Living Solutions, a retirement advisory
service. Contact her at jeancherni@sbcglobal.net or
15 The Ponds, Branford 06405.
H. Pearce Company REALTORS®
is a full-service real estate company with more than 100
agents and branch offices in greater New Haven and the Shoreline.
Corporate and & Commercial offices are located in North
Haven, where the company was founded in 1958. All listings
can be found in color on the web at: www.hpearce.com. |
