Home ownership for those over 55 in the U.S. averages over 80%. Ownership for this age cohort is over 10% better than the general American public. For those thinking about a move to a continuing care retirement community, a community that provides independent living options as well as higher care related options, today is the best time to commit to a move because: a) You get to make the Choice versus having the choice made for you b) You share the risk and reap the economies of scales c) With the economy, CCRC providers are presenting more and more value to the end consumer d) home buyer tax credits must be secured with a signed contract by May 1, 2010 with execution of the contract taking place by July 1, 2010, and this means a buyer could be leaving $8000 behind if they are a first time buyer or $6500 behind in tax credits if they have previously bought a home.
You get to make the choice. Making a decision before you have to gives you more control of your circumstances, and places fewer burdens on those around you to choose a lifestyle on your behalf. If you cannot answer the following question in the positive, it is time to make a change: “Six months from now will I be better off living where I am living versus making a move?” And in answering this question remember the market can just as easily go down as it can go up, so the conclusion should be based on circumstances more within your control. An added bonus is that once you make a choice and you move to take advantage of your new lifestyle, you have time while you are still relatively healthy and active to meet people and develop what will likely in the future become an important support base to help you through potentially more difficult times ahead.
You share the risk and reap the rewards of economies of scale. Today, if your roof needs repair, you pay for it. If the cost of heating or cooling your home goes up, you are responsible to pay 100% of the increase. Living in a community setting, you benefit from sharing any cost increases amongst all residents. You also gain from a community’s ability to purchase products at a less expensive rate based on volume. Ultimately, this should allow you to budget more appropriately for your own monthly expenses, knowing that many of the items that use to be treated as variable costs previously in your life (house maintenance for example), have become fixed and known costs paid for by the community itself.
Communities are offering more value than ever before. As the economy has changed, those focused on people 55 and better on a new lifestyle have had to adapt as well. With consumers having less in the way of net worth, they still want and expect to receive great value for their dollar. Communities are now more focused than ever on bundling lifestyle experiences for a resident. In addition, providers have become increasingly more flexible with offers to: pay for moving expenses; add additional amenities to an apartment; waive traditional fees, and in some cases freeze or cut back on an entrance deposit or monthly fee. Taking advantage now of a move could result in thousands in savings.
Valuable tax credits need to be acted upon today. According to an April press release from the U.S. Treasury Department, nearly 1.8 million new home buyers have taken advantage of the first time home buyer tax credit. In addition, pending home sales rose in February, 2010 by over 17% relative to same time 2009, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors. Contracts that are created prior to May 1, 2010, and executed on before July 1, 2010 are eligible for the first time home buyer tax credit of up to $8,000 or up to $6500 for an existing home owner who wants to purchase a new home. Unlike towards the end of last year when the first time home buyer tax credit program was extended by Congress, everyone seems to realize that no new extension is forthcoming even though as one associate finance professor from Georgetown University, James Angel put it, "The doctor is pulling off the life support system hoping that the patient's heart beats on its own.”
The $8000 tax credit represents in places like San Jose, California, 1.6% of the average asking price for a home, to a high in Detroit, Michigan of 7.3%. In markets like Phoenix, Arizona it represents a 4.7% value relative to asking price, and in Baltimore, Maryland, it would cover an average real estate broker’s commission fee at 3.2% of the asking price for a home. In the full article, you can see a list by major metropolitan cities of the impact receiving the $8000 credit has relative to the asking price in the city as of April 2010.