There was a short article in the local paper recently with advice from a real estate agent in the area on this topic. I am in TOTAL disagreement with the response that this agent gave, and so here is my advice on this topic.
(FYI, this agent basically recommended that the seniors stay where they are until prices get better.)
For the most part, the majority of senior citizens do not have a mortgage. They have either lived in their home long enough to pay off their mortgage, or they may have downsized into a townhome or condo, with a low mortgage or no mortgage. Based on my experience working with seniors, I have found this to be very true. Of course there are exceptions to this - there always are when you make generalizations, but I'm using this assumption of no mortgage.
With this in mind, if you (or your loved) one are thinking about moving into a smaller space, or moving to senior community with planned activities and meals, or if you they need to be in an assisted living facility, you should take action to sell your current home immediately. While it is true that you will not receive the windfall dollars that you would have if they sold during the bubble of 2005/2006, you can sell at a reasonable price, the new normal, of today's market. If you have lived in you single family home for over 30 years, you will not be "losing" any money by selling in today's market. Prices are definitely higher than they were back then.
If you are selling a townhome or condo, or any place you have lived for less than 7 years, then you may end up selling below what you originally paid for the place, depending on when you bought, the condition of the property and the location. At the end of the day, you really need to think of this "loss" as the cost of living in that property. If you do the math, the dollar amount of the loss is probably less expensive than if you had been renting for all those years. And, if your money had been invested in the stock market during that same time period, you could be in the same position.
What I have learned from personal experience is that it is more important to get on with your life and live where you want/need to be than to worry about losing some cash on the sale of your home. I think this is especially true for seniors. Maintaining a single family home is a lot of work and it can be expensive. And if you are living alone, this can be an overwhelming burden. If you are having mobility issues, moving into a space without stairs can be a very positive change for you. If you live alone and don't drive anymore, there is no need for you to remain isolated in your home. There are many other options.
My last point is probably the most important. THE PRICES WE SAW IN 2005 AND 2006 ARE NOT COMING BACK ANY TIME SOON. I have heard this phrase too many times: "I want to wait until the market gets better." As I've said previously in this blog and to many people in person, we are going to continue to see declining prices until all of the distressed properties are sold. Experts are saying that there will be more foreclosures and short sales during the first quarter of 2012. And after that, at some point prices are expected to rise...but the annual increases will be at a rate of 1% o to 1.5% a year. That means it could be more than 20 years before we see those bubble prices again, if at all.
So, what are you waiting for?
Thanks for reading!
nsk
Nancy S. Karp
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