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Declining property values are forcing homeowners around the country to lower their expectations about the kind of retirement they’ll be able to buy with their home equity. And providers of long-term services and supports are feeling their pain.
The individual stories may vary, but the theme is the same, according to a recent USA Today article, which included these examples:
If you think these are isolated instances, think again. AARP reports that nearly 32% of adults over age 50 say their home has declined substantially in value over the past 3 years. And, according to USA Today, those homes aren’t likely to recover their value before the owners reach retirement age.
Declining Values = Low Occupancy Rates
Declining home values are creating major headaches for assisted living and continuing care retirement communities (CCRC). Average occupancy in both settings has declined from 91.8% in the fourth quarter of 2006, to 87.9% in the first quarter of this year, according to the National Investment Center for the Seniors Housing & Care Industry. CCRCs have taken the hardest hit because prospective residents need a high sale price to pay entrance fees.
The stagnant housing market has led to some creative marketing approaches, however. LeadingAge Member ACTS Retirement-Life Communities is "offering incentives we never have before and probably never will again,” spokesman Michael Smith told USA Today. Those incentives include reduced entrance fees, payment deferrals and help with closing and moving costs. Assisted living communities are getting creative too, by offering: