As aging members of the Silent Generation struggle to pack up their memories and move into smaller houses and assisted-living centers, Baby Boomers are still buying real estate.
“There’s no easy way to define what a senior is,” said Adrian Reed, a real estate agent with RE/MAX Properties. “I certainly can’t say. I think AARP says 55, but I know 60-year-olds who would be insulted if you called them a senior.”
People in the Silent Generation, anyone born between 1925 and 1945, are moving out of their long-time homes for financial and health reasons, leaving behind treasured belongings, memories and usually dated but high-demand real estate.
As Boomers reach retirement age, they’re selling the same type of real estate their parents are leaving behind, but they aren’t moving into assisted living or downsizing, which means the senior real estate market could be very different in coming years.
When seniors move
Every senior sale is different, Reed said. The seniors she helps to sell their homes are typically older women who have lost their spouses. Sometimes there are couples and, more rarely, she helps single men.
“Sometimes they’re scaling down,” Reed said. “They own a house that’s way too big and hard to maintain. Maybe they can’t afford to maintain it because the spouse died and that Social Security income went away.”
Often, when seniors leave their homes, there’s a medical reason and they’re going to assisted-living centers or nursing homes, Reed said. And that can be a very difficult and emotional transition.
Holly Skelton, an agent with ERA Shields and designated senior real estate specialist, works primarily with seniors. She says it’s different from families or young couples.
“A lot of Realtors don’t like working with seniors,” Skelton said. “It takes a lot of patience and extra time.”
She helps her clients make their next move. There’s a scarcity of single-story condos and townhomes in Colorado Springs, and seniors often end up moving to apartments.
“You don’t get paid for that,” Skelton said, but she does it because she enjoys working with seniors and hearing their stories.
“The hardest thing is asking them to put their belongings away,” Skelton said. “They’re not just things — they’re memories.”
She works closely with Lyn Segina, who owns Imago Home Transitions Simplified and helps seniors move.
Only about 13 percent of seniors have adult children living in the same city, Segina said, part of a big shift that started with the Silent Generation. They came back from World War II, went to college on the GI Bill and bought homes with VA loans. They moved away from family, and their children did the same.
Segina uses a floor plan of her senior clients’ new home. Clients go through their belongings and decide what they want to keep, and she draws it on the floor plan and shows it to them.
“I usually don’t have to say anything,” Segina said. “They can tell it won’t all fit and start making decisions.”
The selling process
Selling homes was difficult for seniors during the housing crisis. But the market has changed.
“And it’s really exciting for seniors,” said Lei Lonnie Watts, an ERA Shields agent who also has the senior real estate specialist designation. Most seniors are selling 2,000- to 2,500-square-foot homes with three to four bedrooms and two or three bathrooms and a garage. They’re usually older houses in established neighborhoods.
Those houses are typically selling for $250,000 or less. Watts said 67 percent of all homes that sold locally in 2012 were in that price range. And the average home sales price in Colorado Springs climbed 5.8 percent year-over-year. Sales prices comparing December 2012 to December 2011 were up 14.32 percent, she said.
All of that is good news for seniors. It means they don’t have to update their homes to sell them. They’re ideally priced for first-time homebuyers.
“Houses like that are flying off the shelves,” she said. “Seniors don’t need to be afraid to sell.”
It doesn’t matter what school district the houses are in, she said, they’re selling within 30 days if they’re priced right. Of course, they’re selling at higher prices in school districts 12 and 20, but single people and young couples who don’t have children yet are also looking in District 11.
A lot of the homes were updated in the mid-1980s when today’s seniors were at the height of their earning potential. They invested a lot then and they like the way the house looks.
That’s the hard part, Skelton said — telling someone that the beautiful mauve kitchen and blue carpeting won’t please young families.
Those houses sell at a lower price, Watts said. But it’s still a fair price. Young do-it-yourselfers are happy to buy those kinds of houses in good school districts and fix them up as they go.
Facing the debt issue
Most members of the Silent Generation avoided debt throughout their lives. They don’t use credit cards and they keep cash in funny places throughout the house, Segina said.
“It’s in books, in the tool chests, everywhere but in the bank,” she said.
Most own their homes outright by the time they have to sell. But some took out second mortgages for medical bills or their children’s education, Reed said. She works with plenty of seniors who still have mortgage debt deep into their retirement.
While debt late into retirement years is less common for today’s seniors, it could be a fact of life for Boomers.
Nearly 82 percent of people between 55 and 64 are carrying debt. The average household debt for those older than 55 has more than doubled since 1992 to $70,370, according to a December report from The Employee Benefit Research Institute.
Boomers are selling their houses now just like their parents.
They have the same types of houses in most cases — 2,000 or more square feet with three or four bedrooms, Watts said. The difference is that they don’t have the china cabinets and the deep sentimental attachments to the homes that the Silent Generation does.
Watts worked with other Boomers in their mid-50s within the past month who sold or are selling their houses and buying something else. They’re not downsizing. The houses they’re buying are the same sizes as the ones they’re selling.
“They don’t have to move,” she said. “But they’re asking themselves — ‘what do I want my retirement years to look like?’”
One couple recently took up mountain biking. They’re looking for a place right in the mountains — something in Rockrimmon or Cheyenne Cañon where they can get easy access to trails. Another couple bought a place on five acres in Black Forest. A single male client is renting out his old home and looking for something with a better view of the mountains and more privacy.
All of the homeowners have updated their houses and still owe about $100,000. One couple might add a little to their debt, another will wipe out their house payment, and the single man will make about $500 a month after his rental income helps offset any new house payment.
Boomers aren’t thinking about assisted living or keeping everything the same. They’re looking forward to the next chapter.
Watts herself just bought what she says will be the last home she owns.
“I’m 51 and I’m a Boomer,” she said. “We are all picking houses based on what we want our everyday experiences to be.”
She wants to enjoy coffee on her scenic deck every morning.
Reverse mortgages help seniors stay in their homes if they desire
Reverse mortgages developed a bad reputation during the housing crisis, but they’re making a comeback, according to national reports.
Michael Burges, a loan officer at The Bank of Colorado who specializes in reverse mortgages, says he has been getting more questions about them recently.
“It’s designed for seniors who can’t afford to live in their homes with a mortgage payment anymore,” Burges said. “But I’ve heard all kinds of scenarios.”
There’s no need to prove a hardship to get a reverse mortgage, Burges said. He worked a deal several years ago with a retired doctor who said he didn’t need the money — but believed the equity in his home could be better invested elsewhere, because real estate didn’t seem to be appreciating.
To qualify, a homeowner must be at least 62 years old and have at least 35 percent equity in the property. The borrowing limit depends on age and property value. Amortization is calculated based on the borrower reaching the age of 100. Including interest, the loan amount should equal the estimated value of the home shortly before the time the borrower reaches 100, Burges said.
“It’s probably the most consumer-protected loan there,” he said.
Borrowers have to talk with a certified counselor to be approved. The property title stays in their name and they can leave it to heirs. If there is more debt than it’s worth when the homeowner dies or has been out of the home more than 12 months and the loan becomes due, heirs are not responsible.
Burges said there was a lot of misunderstanding about reverse mortgages during the housing crisis because homeowners with underwater loans essentially turned the houses over to the banks when the notes were due.
“There are a lot of seniors who don’t have the money to manage a mortgage payment in their retirement,” Burges said. “The program is designed to allow seniors to stay in their homes.”