Baby boomers confound experts with their housing choices

Posted: May 20, 2012

In the first few years of the last decade, a lot of assumptions were made about aging baby boomers, their parents, their children, and their housing needs.

Boomers would begin downsizing as soon as the children flew the coop, starting at about 55. Boomers would move to communities filled with their own kind.

Elderly parents would be accommodated in a casita — a part of the house — until they needed continuing care. The casita would then be converted to a crafts room.

Financing would be all-cash — the equity from 40 years of suburban living.

Everyone would be buying. The new-home industry was betting the farm on it, in fact.

The housing bubble took a huge toll on those assumptions, of course. Trillions in equity disappeared in the blink of an eye, and millions of people who had been considering a move found themselves treading water, if they weren’t underwater.

One problem is that you cannot pigeonhole any age group. Too many “experts” seem to have made too many assumptions about boomers. Anecdotal evidence now suggests that boomers are delaying moving until the real estate market improves, and that many are changing their houses to remain longer than planned.

There are people who want to move to something smaller. There also are those who have no plans to move.

For example, Charles and Maureen Budenz, both 67, have no plans to sell the house on a cul-de-sac in Towamencin Township built for them in 1987.

The couple love the house and keep it in pristine condition, even though Maureen admits that maintaining the larger property is “expensive.”

“When we built the house, we thought that after our daughter graduated from college, we’d move on to something else — something smaller and perhaps nearer to her,” she said.

It was a thought, not a plan. It was fortunate they didn’t move, because after learning that her job as director of student services at a school district near Harrisburg would be eliminated, daughter Danielle decided to enroll at Widener University to pursue a doctorate in education.

She moved home, has just received her doctorate, and is waiting to decide her next move.

Her decision might affect what her parents do, or might not.

“Aging in place here would depend on our health, which is great, and assuming it stayed that way, we could stay here a very long time,” Maureen said.

“We’ve made the house perfect, and the market isn’t good,” she said. “We know if we had to sell our house for less, we could buy for less.”

“The house is so perfect for us that it would be hard to replace it, and it certainly would be mentally hard to accept $200,000 less,” she said.

Cathy Ward and her husband, Walter, who bought their carriage-style house in Devon in 1996 and had paid off the mortgage, had been talking about moving into the city.

“We had a number of friends who had moved into the city,” she said. “We had talked about it as the next stage before our real retirement. His office was in the city, we were members of the Union League, we thought it would be an interesting move.”

It might have happened, too, but Walter died in April 2010. Cathy took a job at the Kimmel Center and decided that she didn’t want to commute to Center City every day from Devon.

In November 2010, she signed a year’s lease on a unit at Symphony House, next door to her job.

“At the end of the lease, with everything up in the air, I looked around at other places and kept coming back here,” she said. “For me it was a life transition. A wonderful transition.”

Ward was fortunate that the Devon house had no mortgage, of course, but equally important was the fact that it was just 25 years old, part of an association that handled common maintenance and had a first-floor master suite.

The buyers were widowed retirees looking to combine their households into one. Too often these days, however, the buyers are younger and looking for a bargain, unwilling to pay what aging sellers believe they need to get for their houses. This is forcing many aging sellers to stay put, said financial planner Raymond Carota.

“The challenge for them is that we’re in a market where people need X price to move and they can’t get the number,” said Carota, of Brandywine Financial Group in Center City. “My recommendation is that they rent the property to obtain a revenue stream, refinancing to reduce the mortgage if necessary and keeping the tax advantage.”

Carota said a lot of his clients have made commitments to move — building a retirement place in the South, for example — and have had the house on the market for months, getting only lowball offers.

“The real estate market is weak from a sale point,” said Carota. He recently took a Manayunk townhouse off the market and resumed renting it when the purchase offers came in too low, thanks, in part, to a couple of distressed sales bringing down prices.

“Buyers aren’t going to pay top dollar for 40- to 50-year-old houses when there are foreclosures down the street that they can almost steal,” he said.

The challenges for aging sellers is that there are more and more houses owned by that segment of the population coming on the market, making the situation even worse, Carota said.

Noelle Barbone, office manager at Weichert Realtors, said there were still too many overpriced listings on the market “due to agents who are telling unrealistic sellers what they want to hear.”

In addition, there are low appraisals and difficult home inspections, caused primarily by homes with deferred maintenance that erodes a seller’s bottom line, she said.

Ward put her house on the market around Thanksgiving 2010, then took it off until after the holidays, when it sold quickly.

She believes she was fortunate in timing. Ward also attributes her success to the conservative approach to home ownership that she and her husband shared — an attitude all but forgotten during the impossibly leveraged buying frenzy of the boom years.

“Younger people seemed to want big houses” they needed to stretch to buy, she said. “There seemed to be a disconnect between money and reality, credit cards, computers, and numbers, and the result was a real wake-up call” for millions of Americans.

By contrast, “we were always conservative when we bought houses,” she said. “We always bought much less than we could afford.”

Contact Alan J. Heavens at 215-854-2472, or @alheavens at Twitter.

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