By Alane Cunningham- Contemporary Retirement

 

Every indicator points to a slow and painful economic recovery and if done correctly, everyone will feel some of the pain.  In retirement,  it is particularly scary wondering if you will outlive your money and if Social Security benefits will continue to provide the security we have depended upon for generations.  Social Security is probably the greatest social program ever created, and I feel fairly certain that it will continue for our generation.   With the proposed raise in retirement age to 69, we should feel very fortunate to have what we have now.  

One of the major causes of our current economic meltdown is the housing meltdown and decline in housing prices.   Depending on where you live in the country, you may have seen  the great price increases of the 1990’s and early 2000’s, and now the calamitous downfall.  They got to see it go up but almost nobody saw the great decline coming.  I guess we were all drunk on what we saw as our largest financial asset, our homes, going up 10 and even 20 percent in a year!

Wow, what a change we have seen.  In December’s Forbes magazine, Zack O’Malley Greenberg’s headline, “The housing bust means you can retire to the Sunshine State for the price of a new Buick.” shows just how crazy things have become.  While there may be some deals to be had, there are also some things you should know before you consider making a move.

It is harder than ever to get a bank loan for a mortgage.  For any condo below $50,000, you should be prepared to pay cash.  The same goes for sellers.  Be realistic.  If you can only sell to cash buyers, you eliminate 85% of your market.

Do research.  Vacancies in condo communities can drive up how much your maintenance fees will be.  Although having a community swimming pool can be appealing, it won’t be if you are the only one paying for it. And as these condo’s age, remember, the maintenance costs greatly increase making large assessments, sometimes in the tens of thousands for large projects inevitable.  

If you are looking for a stand alone home, make sure it is in an area where houses will retain their value and there is the potential for your investment to come back.  In retirement communities,  it is important to look at the annual financial reports and the number of delinquencies,  because most banks won’t extend loans if mortgage delinquencies in  a homeowners association exceed 15%, or if 25% of units are empty.

As you enter retirement, or if you are already there, it seems strange to be thinking of taking on a new housing situation.  However, this truly is the time to do research and weigh the pros and cons.  It may be an opportunity to find a great place to live in a community that just a few years ago seemed unattainable, and also leave a valuable asset for your heirs.

 

 

About Alane Cunningham

Alane is a graduate of Eastern Michigan University. She retired from the University of Michigan after 27 years. She currently lives in Florida in a small beachside community with her husband. She navigates retirement with human nature observations realizing everyone must find their own way to happiness through this passage of life.

 

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