Retirees counting on home equity may face financial shortfalls

"Researchers found that an average 80-year-old seller could receive about 5% less than a 45-year-old homeowner, the Times report explained. The consequences can be severe for retirees relying on home equity to finance a new home purchase, assisted living or long-term care. The real question is, where are they transitioning to? Dan Sudit, a wealth adviser and partner at Crewe Advisors in Salt Lake City, told the Times. It might not be a two-bedroom or a one-bedroom, but might wind up being a studio-type unit."

"Housing professionals say one major factor behind the pricing gap is deferred maintenance. Older homeowners are less likely to renovate kitchens and bathrooms, complete repairs or modernize interiors before listing their homes. Unless something's broken, they don't fix it, Amy Bubes, a real estate agent in Atlanta, told the Times. Outdated aesthetics can also deter buyers who already face affordability pressures. You've got the avocado bathtub and yes, the fridge works fine, but it's harvest gold, said Beverly Grace, owner of Grace Realty and Property Management in Seminole, Florida."

"Some industry professionals argue that reverse mortgages could help older homeowners unlock equity without rushing to sell but the products continue to carry stigma decades after their introduction. Michael Banner, a reverse mortgage educator and leader at American Pacific Mortgage, recently told HousingWires Reverse Mortgage Daily that misinformation continues to limit the adoption of the HECM for Purchase program. This product is surrounded by more misinformation and half-truths than any other product in the history of the financial world, Banner said. There's only one way to do it: education."

An age-related pricing gap can reduce what older homeowners receive when selling. An average 80-year-old seller may get about 5% less than a 45-year-old homeowner. The impact can be severe for retirees using home equity to buy a new home, move into assisted living, or pay for long-term care. Housing professionals link the gap to deferred maintenance, since older owners may delay renovations, repairs, and interior modernization before listing. Outdated aesthetics can also reduce buyer interest amid affordability pressures. Some professionals suggest reverse mortgages could help older homeowners access equity without rushing to sell, but stigma and misinformation continue to limit adoption. Education is presented as the main solution to improve understanding of reverse mortgage options.

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