Housing Market Derailing Seniors' Plans for Long-Term Care

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(Sacramento, CA)
Thursday, August 14, 2008

Michelle Amaral is worried. She’s a health economist at University of the Pacific in Stockton. What’s keeping her up at night is her concern for seniors on a fixed income, especially those who are sick.

“Seniors sell their homes in order to find the money to move into assisted living facilities and nursing homes and with the housing market plummeting, they’re not seeing the equity they would have typically had.” 

That’s the case for David Grathwohl. 

“Makes you wonder how could this happen?”

Grathwohl is a 68-year-old retired attorney. After two strokes he’s bound to a motorized wheelchair and can’t work. But he can still get around his small condo where he spends most of his time.

“This is the big room…I put in the floor…”

On a sunny afternoon at his home in Modesto a caregiver prepares meals for Grathwohl and his wife Ursula who also had a stroke and can’t speak.

The private insurance that covers Grathwohl’s in-home health care will run out in two years. And, Grathwohl says his plan to sell his condo to help pay for the costs of a nursing home is shot. He’d invested his savings in the dot com boom. That burst. So then he thought he’d invest in something safer – a home. He bought his condo in 2005 – at the peak of the market.  If he sells it now he says he’ll lose at least $70,000.

Grathwohl: “I lay in bed, for the last three weeks, just crucifying myself because I don’t know of any solution.”
Saucedo: “Every day, you know, I hear it every single day.”
Carla Saucedo works at the Stanislaus County Area Agency on Aging. She advises seniors on how they can get assistance. She says middle-class seniors are in a particularly tough spot.  Many were relying on the equity from their homes to fund health care costs. That’s because they don’t meet the income requirements to qualify for public health programs. And, Medicare does not cover assisted living costs.

“Because the state is not going to pay you for assisted living or the government is not going to pay you for assisted living. Options are very few, you either go through doing a reverse mortgage, sell your home, or move in with your children.” 

The federal agency on aging reports 70 percent of people over the age of 65 are going to need a lot of money to pay for long-term care. On average in California it costs about $35 per hour for in-home care and $70,000 a year for a shared room in a nursing home.  Saucedo says many seniors are choosing to stay in their homes and forego needed health care while they wait to sell when the market gets better.  Beverley Marlow is the president of the Central Valley Association of Realtors.

“The homeowners thought they had a plan, and it, for the next two, three, five years, that plan has been derailed.” 

And this comes at a time when the AARP is reporting that seniors are in more debt than ever before.  Don Redfoot is with the AARP Public Policy Institute.

“No question that there is some segment who retires and wants to take that dream vacation or buy that boat. It may be even more typical that you find that you use up the equity on the terminal phases of a spouse’s illness.”

For seniors like David Grathwohl it’s a nightmare.  He says his children can’t help him and if he sells his house he’ll lose thousands.  

“It’s just not the way I thought my life was going to end, you know.”

Grathwohl says he, like so many other Americans, thought of his house as an asset. He says if he could do it over again…he would have spread out his investments.