Retain Your Home and Age in Place in Uncertain Times

Homeownership offers many advantages, not the least of which is the opportunity for appreciation, an increase in your home’s equity over time. For example, a median-priced home in the Minneapolis/St. Paul area was about $164,000 in 2011. By July 2020, the median home price in the same Twin Cities metro region was $305,000, an increase of 86%.¹ Red-hot coastal markets like New York, San Francisco, Seattle, and Los Angeles saw even greater appreciation.

If you had been along for the housing ride, you certainly couldn’t be faulted for deciding to sell, cashing in on a big payday. The trouble is, you would have to move somewhere else, and chances are your current home could be worth even more next year. According to the National Association of REALTORS ® (NAR), median housing prices from August 2019 to August 2020 rose 11.4%. That’s appreciation you would have missed had you sold.

Also know you’re not the only one aware of the runup in housing prices. It’s likely that in your market area, real estate agents have been bombarding your home with flyers and doorhangers, citing strong buyer demand, low interest rates, and rock-bottom housing inventory, such as “Why This Is Actually the Best Time in Years to Sell a House.”²

As with the Great Recession, some of the world’s largest private equity groups and hedge funds have also returned to the feeding frenzy, amassing billions of dollars from Wall Street investors to purchase thousands of homes during the current pandemic. In August, Invitation Homes said it was ready to add to its portfolio of 80,000 single-family homes, further inflating housing prices.³ The firm raised $448 million through a June share sale to fuel its new round of purchases.

Undoubtedly, rising home equity has been a boon for home sellers, but the truth is, nearly 90% of homeowners approaching retirement want to stay in their homes as they age, according to AARP.⁴

Therefore, the challenge for many of the 90% is not only how to remain home but how to maintain their space so they can continue living independently. This especially applies to those who have lost jobs or seen work hours reduced while bills continue to rise — a group that might self-identify as “house-rich and cash-poor.”

Fortunately, there are innovative solutions designed to help seniors age in place, which is contingent on compliance with the loan terms, such as paying property taxes, insurance, and maintenance of the home. As a result, elderly homeowners who may feel compelled to sell because of a combination of financial and physical conditions may not have to sell the homes where they feel most comfortable and secure.

“We now find ourselves in the midst of an aging gold rush,” said National Aging in Place Council (NAIPC) Executive Director Marty Bell. “Many new businesses, services, websites, and solutions are cropping up specifically to serve the older population.”

Here are some of them:

Solutions for Aging in Place

– Seek property tax relief programs. If you don’t think you will be able to pay your property taxes — a frequent failure which can lead to foreclosure — contact the property tax department of your county or the largest local government to ask about hardship programs for property taxes. While the right to remain in the home is contingent upon complying with the loan terms, such as paying property taxes, homeowners insurance and maintaining the home, some counties offer these programs for people who can’t pay delinquent property taxes because of a financial hardship. Program rules and eligibility vary by area. Follow all application instructions from the county office.

– Stay on top of mortgage relief scams. After sifting through public foreclosure notices in newspapers and on the internet or through public files at local government offices, fraudsters often send personalized letters to homeowners, with promises to “Stop foreclosure now!” or “Keep your home.” The scam artists tell you that if you pay them a fee, they’ll negotiate a deal with your lender to reduce your mortgage payments or save your home. They may claim to be attorneys or represent a law firm. They may tell you not to contact your lender, lawyer, or credit counselor, promising to handle all the details once you pay them a fee. Then they stop returning your calls and take off with your money. Falling for such scams makes a tough financial situation far worse.

– Talk to a HUD-approved housing counseling agency at no cost to you. For more information about available programs and guidance on your age-in-place options, call 888.995.HOPE (4673), available 24 hours a day, year-round, for help in more than 170 languages.

– Research if a reverse mortgage can help you. A reverse mortgage loan is a way for Americans, 62 and older, to tap some of their home equity and turn it into a tax-free cash that can be used for almost any purpose. You can use the money to make home modifications, making your dwelling safer and easier to get around in. You can also use the cash to cover the expense of occasional in-home help or even full-time care. To find out if a reverse mortgage loan is right for you, click here.

With new September survey results by NPR, Robert Wood Johnson Foundation, and Harvard’s T.H. Chan School of Public Health revealing that 4 in 10 households face serious financial problems during the COVID-19 pandemic⁵, a reverse mortgage could also provide financially stressed homeowners with increased monthly cash flow to ease their financial burdens.

– Be proactive. Don’t ignore notices or warnings threatening foreclosure, a shutoff of utilities, or other severe penalties for non-payment. Rather, calmly determine a workout solution that works for everyone. Whatever you do, don’t panic, which could make you vulnerable to scams. For example, if you didn’t pay your taxes to the IRS, you will generally first receive a notice from the IRS in the mail. The IRS does not call to demand immediate payment or ask that you make that payment via a prepaid debit card, gift card, or wire transfer.

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A home, on which you have likely made mortgage payments for years and even decades, is more than an investment. It’s where you live, where you have raised a family and sunk roots in the community. Your home reflects who you are.

To give all that up may not be worth any price or increase in your home equity. At the same time, especially in the middle of a pandemic, financial realities are what they are. Just know that if your desire is to stay right where you are, you may have more options and resources than you realize so long as you comply with the loan terms such as paying property taxes, homeowners insurance and maintaining the home. The help is out there, but it’s up to you to reach out for it.

We hope this article has given you some help with things to think about. Of course, every situation is different. This information is intended to be general and educational in nature, and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement.

 ¹ https://www.startribune.com/schafer-think-the-stock-market-has-made-big-moves-take-a-look-at-home-values/571946572/

² https://www.realtor.com/advice/sell/reasons-why-now-is-a-good-time-to-sell-a-house/

³ https://magazine.realtor/daily-news/2020/08/05/investing-giant-to-double-down-on-suburban-home-purchases

⁴ https://www.housingwire.com/articles/46447-most-seniors-want-to-age-in-place/#:~:text=Nearly%2090%25%20of%20homeowners%20approaching,reverse%20mortgage%20professional%20can%20use.

⁵ https://abcnews.go.com/Health/living-edge-10-households-face-financial-problems-pandemic/story?id=73179882