Straight talk from Greg McBride about the current housing market and its impact on the senior living marketplace.
By Steve Moran
It was so cool . . .
I recently got a chance to interview Greg McBride, the Chief Financial Analyst for BankRate.com. You have likely seen him on TV or quoted online or in the print press as one of the premier economic experts on the US housing market. (Note: Bankrate is the parent company of Caring.com, a Senior Housing Forum partner.)
We spent the time talking about the current housing market and it’s impact on the senior living marketplace. Here is what he had to say:
The Housing Market
The housing market continues to be strong mostly because of low interest rates (under 4%).
There is very limited inventory at the middle class price point. This is largely true because what happened in a more traditional/historical housing market is that families purchase a home, then build up some equity and during the same time, their careers are advancing, which means higher incomes. At some point, they sell their starter home or current home and move up into something nicer. Because of wage and income stagnation, this pattern has not been happening.
While builders are continuing to ramp up production of new houses, there continues to be a need for both new and existing housing.
I asked if we should expect to see a bump in interest rates and his feeling is that even if the Fed increases rates, which seems likely, it will not have much of an impact on mortgage rates. He pointed out that with the increase at the end of last year, mortage rates actually pulled back just a tiny bit.
Will There Be Buyers?
Greg made the point that it is tough to find buyers, because credit approvals are so tough since the mortgage meltdown. He says it is simply not true. Interest rates are low, you can find home purchase money even with moderately low credit scores. There are a bunch of different programs that will allow folks to purchase homes with as little as 3% down.
We spent a bit of time chatting about reverse mortgages, which may not have direct application for senior living since they require the buyer to remain in their own home. They do provide a powerful way for homeowners to free-up equity for home care or just to cover day to day living expenses or extras.
The Housing Market and Senior Living
It is a great time to sell and downsize.
Downsizing can mean a bunch of different things including selling and moving into a smaller place; selling and moving into a larger place in a lower cost area; and selling and moving into a senior living community.
I asked Greg to speculate on whether it makes sense to sell now in a seller’s market or wait a year for even bigger price increases. He expects modest not huge price increases over the next year and feels that the primary determinant should be a person’s or couple’s health and lifestyle preferences.
From Greg’s perspective this is a great time for seniors to get maximum financial benefit from their homes as they make the move to senior living.
Greg will be talking more about the housing market and senior living during Caring.com’s free monthly webinar on June 16 at:
- 11:00 AM Pacific Time
- 12:00 Noon Mountain Time
- 1:00 PM Central Time
- 2:00 PM Eastern Time
It will be a great opportunity to hear his thoughts and ask your own questions like . . . “What impact will the election have on the housing market?”
You can sign-up HERE (please note that while the webinar is free, the registrations slots are limited).