When his wife, Betty, was diagnosed with Alzheimer’s disease, Larry Dunlap knew it was time to sell the house they’d lived in for 30 years and move to a retirement center.
He knew selling the four-bedroom home would be difficult in a housing market riddled with foreclosures and declining values, but he put a deposit down on an apartment at the Holly Creek Retirement Community in Centennial and hoped for the best.
The economic slowdown has taken its toll on senior housing developments such as Holly Creek as would-be residents have opted to stay put because they couldn’t sell their existing homes or because the value of their other investments had plummeted.
The $6,500 tax credit for owners who have held their homes for at least five years is considered to be a glimmer of hope for the industry, but it likely won’t solve all its woes.
At Holly Creek, for example, it took two years to fill the 114 units built in the community’s first phase. It opened its second, 84-unit phase in August 2008; today it’s 98 percent occupied.
“The tax credit really helped consumer confidence,” said Marilyn Berry, sales director at Holly Creek. “Our seniors are not hesitant anymore to put their homes on the market, even though they know they’re not going to get what they would have several years ago.”
Dunlap took a financial hit on the sale of his home but was able to sell it in less than two months to a young couple taking advantage of the $8,000 first-time-homebuyer tax credit. The sale is set to close Feb. 26.
“She’s expecting, and they want a big family,” he said.
Both first-time and move-up buyers have to sign a purchase agreement by April 30 and close by June 30 to take advantage of the credits.
Kate Dukes, a personal moving consultant at the Wind Crest Retirement Community in Highlands Ranch, said the tax credits are helping seniors get their homes sold, but in many cases the value of their properties has declined sharply.
“Foreclosures have taken the value of their property down,” Dukes said. “It’s disheartening that people think they have all this equity and maybe they have $20,000 left.”
Adding to the problem is the difficulty potential buyers have getting financing. It took Holly Creek resident Herb Bowman 43 showings and three months to sell his house in late 2008.
“I had three offers on the house, but when the chips were down, they couldn’t produce the financing,” he said. “They had letters from the banks, but in the end, the banks wouldn’t honor them.”
The 3-year-old Wind Crest community’s 579 units are 85 percent occupied, Dukes said. She’s optimistic that the housing market is picking up and more people will be able to move in.
“I’ve been talking to some of our preferred Realtors about the market, and they all are telling me that showings have picked up and they perceive this will be a great year,” Dukes said. “Houses are going to get sold, and more and more people will be able to move in. Hopefully, at some point we’ll be released to start a second community there.”
Payment models for retirement communities vary. Generally, however, there are large entrance fees — in addition to monthly costs — to access the communities and the assistance they provide. At Holly Creek, for example, the entrance fee ranges from $199,000 to $508,000. Monthly fees range from $2,525 to $4,785. The community guarantees care for its residents, even if they outlive their assets.
The loss of value in their homes means many seniors can’t afford the entrance fees, said Michael Starke, vice president of research at Spectrum Consultants Inc., a North Carolina-based senior-living marketing firm.
“If their home was worth $500,000 in early 2008 and it’s now worth only $400,000, that affects the entrance fee they can pay,” Starke said. “They’ve adjusted their retirement plans and are focusing much more now on needs, not wants. They’re either considering other options or changing the type of unit they move into.”
Research conducted last year by Spectrum showed that of seniors interested in moving to a retirement community, 74 percent are delaying their move because of the weak economy.
Sixty-two percent said their home values had decreased over the past year, compared with 30 percent in 2008, according to the survey. Nearly 56 percent of seniors whose homes lost value expect to recover it at the end of 2011 or later, and 13 percent don’t ever expect to recoup the value.
Last year, at least five assisted-living communities in the Denver area were canceled or put on hold.
There are exceptions, however, and they’re the ones providing a boost to existing retirement communities. Bill and Marily Keebler were able to sell their townhome on East Florida Avenue in three weeks so they could move into a cottage at Holly Creek. Though the couple took a hit on the sale, they said they got a fair price given the state of the housing market.
Many retirees live in homes valued over $400,000, a market that has been particularly soft, said Bill Kosena, a broker with Re/Max Masters Inc. and a designated seniors real estate specialist.
Compounding the problem is that many seniors have unrealistic expectations about pricing, and many refuse to update their properties to prepare them for sale, he said.
“Seniors live in neighborhoods that are 30 to 50 years old, and those homes need updating unless you just want to fire-sale it,” he said. “But you just cannot tell them anything as far as real estate goes. They want it their way. They get a little obstinate as they get older.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
