The economy may slowly be improving, but the housing market is still in a serious decline, preventing many older homeowners who would like to move into a senior living community from doing so. In response, some providers and operators have introduced programs helping homeowners to sell their homes in a bid to get more residents.
Housing price indices are trending slightly upward in many regions across the United States, but as of February 2012 the national index still remained nearly 20% beneath its April 2007 peak, according to Federal Housing Finance Agency data.
Source: FHFA 2012
These lower home values can put a serious wrench in plans older homeowners may have had to sell their homes and move into a retirement community. And communities that charge an entrance fee (which average about $250,000, according to the National Investment Center for the Seniors Housing and Care Industry) to incoming residents feel this trend keenly, as not being able to sell their home strips many older adults of the ability to afford that upfront fee.
That’s where special programs for home staging and purchase agreements come into play. Nonprofit industry group LeadingAge estimates as many as 60% of the nation’s continuing care retirement communities offer some sort of similar program to help incoming or prospective residents sell their homes.
“Home Exchange” program
Sun Health, a nonprofit senior living operator, has introduced a “home exchange” program to help people sell their homes, in exchange for the incoming resident’s promise to use those sale proceeds to pay for the community’s entrance fee, reports NBC News.
Through the program, the operator allows prospective residents to go ahead and move into a community, while they fix up the person’s home and put it on the market. And even if the home doesn’t sell in a designated 90-day window, Sun Health buys the house itself. The company introduced the program in 2010, according to NBC News, and since then, 14 residents in Sun Health’s three Phoenix-area communities have used it.
For this particular program, the homeowner and the senior living operator agree on a sale price for the home, and then if it ends up selling for more, the owners get to keep that “extra” money, the article says. There is a risk to Sun Health (and other companies with similar programs) that the home eventually sells for less than the agreed-upon price, but this has never happened to the nonprofit, and the company has only had to buy the house itself in just six cases.
As part of the program, Sun Health also “stages” the house, similar to what John Knox Village does for its Lee’s Summit, Mo. community, NBC reports. After the homeowner moves into the community, the senior living company will do its best to make the house more appealing.
“We go in and we may completely redo the interior of the house, strip out old wallpaper, redo carpet, paint, landscape—whatever’s necessary,” said Sun Health COO Sharon Grambow in the NBC article.
Throughout the industry
It’s not just CCRC operators who are using these strategies to increase occupancy and resident census. Brookdale Senior Living, headquartered in Brentwood, Tenn., also offers a similar “home purchase” program in its communities with entrance fees.
The senior living operator reintroduced the program in 2008 when the housing market started to slow down, and 15% of residents entering entrance fee communities used the program that year alone. By 2010, nearly 40% of new residents were participating in some form of the housing purchase program.
Other communities, like Covenant Retirement Community’s Chicago-area Windsor Parks, or Riverside Health Systems, based in Virginia, also offer programs that help people sell their homes and transition into a retirement community.
Adopting marketing strategies to maintain optimal occupancy will change as the recession wears on and older adults struggle with fear—and with selling their homes, said Andy Edeburn, a health care consultant for consulting firm CliftonLarsonAllen LLP during a session at the recent Life Services Network annual meeting.
Real estate and senior housing are connected, he said, as S&P home price indices correlate strongly with independent living occupancy. “When peoples’ home value go down and they can’t sell, they don’t go into independent living,” he said. “Helping potential residents sell their homes may become more important.”
Read the NBC News article here.
Written by Alyssa Gerace