When the housing market was soaring, many baby boomers thought of their homes as piggy banks that could be cracked open to fund retirement. High housing prices would allow them to leverage their equity to finance lifestyles, buy second homes, or pay entry fees into retirement communities. That thinking was encouraged by lenders, who aggressively marketed low-interest mortgage debt and equity-to-cash products such as home-equity loans and reverse mortgages.
Now the housing bubble has burst. High unemployment rates, sagging incomes, and rising foreclosure rates mean we're not likely to see a strong rebound anytime soon in the housing market. But planning for your retirement housing needs raises other questions unrelated to the current market. Is a move really the right decision for you, or can your current residence be adapted to serve your needs? What role can technology play in your future retirement residence? Most important, can you shed the costly burden of a mortgage ahead of retirement?
In this chapter, we'll look at what you can expect from the changing real estate market and consider some practical ways to respond.
Older Americans have more exposure to real estate than any other demographic group. Seventy-nine percent of Americans age 55 and older own their own homes, compared with a national median ownership rate of 69 percent. As the bubble inflated, older homeowners took on larger mortgages, and ...