I Need To Move Into Senior Housing. But I Can't Sell My Home!

"My husband and I are both in our 70s, and we have serious health problems. We've decided that we need help with our daily activities, so we want to move into assisted living of some kind. But we need to sell our house first. We need the money so we can rent the new place. We hired a realtor, but she told us that the housing market here in Northern Arkansas is terrible, and that we won't get what we're asking. Our house is just about all we have. What should we do? Can you help us?"

The continuing downturn in the U. S. housing market has impacted many of us, but it's perhaps been the most painful for those who are least able to wait for an upswing: some of the nation's seniors, whose health and personal circumstances have made them desperate to make a near-term lifestyle change.

The current housing market has especially hit those seniors, like Arnie and Sarah, who recently wrote to us. They're looking for help, and they need it right away. These two need the kind of assistance with their daily activities that would be available in a senior housing facility, but they realize that they will have to sell their current home and use the sales proceeds to be able to do so. They also realize that, as seniors, they'll have to personally pay for most of their housing needs: federal programs, such as Medicare, are unavailable for these purposes, and Medicaid is an option only when the applicant's personal assets have been exhausted.

Arnie and Sarah, however, are most likely unaware that the costs of many retirement communities—even those with few frills--can be staggering. For example, a recent study found that the average monthly cost of a nursing home stay is nearly $5,000! This means that, for most aging and disabled seniors, their ability to move will be contingent upon the sale of a single-family home at prices that are unavailable in the current market.

Facing what is perhaps the worst housing market since the Great Depression, most seniors will find it almost impossible to find buyers for their outdated homes. And, with the current glut of unsold houses in many markets, even reducing the asking price may not solve the problem.

The clogged housing market, coupled with the over-building of seniors'-oriented housing in many metropolitan areas, has resulted in rising vacancies in these facilities—particularly in those markets where the single-family housing market is most distressed. Tampa, Florida, to cite only one example, is experiencing a 12 percent vacancy in senior housing units, up dramatically from four percent from the previous year.

A handful of retirement-home marketers who do business in these over-built areas are relying on Realtors to help their prospective clients to sell their existing homes. The problem with this strategy, of course, is that elders' homes are frequently antiquated or need substantial repairs and renovations in order to make them marketable. Outdated wallpaper, old appliances and poor maintenance, all characteristic of these houses, often deter buyers. In other words, these homes, which their owners logically considered would be their guarantee of worry-free living virtually indefinitely, are literally unmarketable as-is.

"The idea is that a senior has built up equity in [a] house, and this assures that they can have care for the rest of their lives," says Larry Minix, of the American Association of Homes and Services for the Aging.

A 2008 survey by the American Seniors Housing Association found that nearly a quarter of seniors haven't made any home improvements during at least the last decade, and nearly one-half reported that they won't spend money to enhance the value of their property in order to attract a buyer.

Even worse, for many seniors, just as the real estate bust has depreciated the value of their primary asset--their homes--the value of their retirement accounts has recently plummeted as well.

What about Arnie and Sarah? They're just two more victims of the disastrous sub-prime mortgage mess that has devastated the entire American economy.