HOUSE ARREST
‘We made sure to pay off the mortgage before we retired,’ say couple trapped in $700k home they ‘can’t move out of’
Black and Hispanic homeowners face a harder time when it comes to building housing wealth
A COUPLE thought they set themselves up well for making their big move into a smaller home.
But when it came time to downsize, Susan Apel and her husband, Keith Irwin were shocked by how stuck they were when shopping for a new home.
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Twenty-four years ago, Apel and Irwin purchased their four-bedroom home on two acres in Lebanon, New Hampshire, reported The New York Times.
Having paid off the mortgage before they retired, the two 71-year-olds wanted to build home equity to eventually sell their house and downsize.
But when the couple began looking around for a two-bedroom condo with a den all on one floor to avoid difficulty getting upstairs, they told The New York Times things proved to be much harder than they originally thought.
The couple estimates their home is worth around $700,000, but came across smaller spaces for just $100,000 less.
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They told The New York Times they even toured a unit that still needed work priced at $950,000.
And places without stairs — a necessity in their next home — were always getting scooped up quickly.
The couple's story is all too common in today's market. Despite having paid off their mortgages, many seniors struggle to find homes that suit their needs within budget.
“We were very grateful to live in this lovely place and to have paid off our house,” Apel told The New York Times. “It never occurred to us that it didn’t give us the ability to move out of it.”
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The search continues for the couple who don’t want to leave their community, reported The New York Times, but are ready to build a living elsewhere.
“This would be a wonderful family home,” Apel told The New York Times. “But we can’t free it up, because where would we go?”
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A study by the Joint Center for Housing Studies of Harvard University found that 43% of older homeowners with mortgages are cost-burdened.
This is defined as spending over 30% of their household income on housing costs.
With about 80% of older adults living in homes they own, many American households are struggling to maintain their standards of living, according to the New York Times.
Accounting for factors like higher property taxes, interest rates, and mortgage balances, homeownership is not the key to financial security it once was.
Median home equity is also up, recording $250,000 in 2022 from $80,000 just three years prior, reported The New York Times.
We were very grateful to live in this lovely place and to have paid off our house. It never occurred to us that it didn’t give us the ability to move out of it.
Susan Apel
Experts told the outlet that taking a federal reverse mortgage could extract home equity and be a solid way for homeowners to land on their feet, though very few do it.
Accessing home equity is also harder as interest rates climb.
And it's more difficult to get a refinancing loan as a senior citizen, according to the Urban Institute.
Lenders look at income and assets, both of which usually decline with retirement.
Seniors are also often denied home equity lines of credit, or H.E.L.O.C.s per the Urban Institute.
And for older Black and Hispanic homeowners, building housing wealth has proven even harder due to lower lifetime earnings, reported The New York Times.
“This is a story of widening inequality,” Anthony Webb, a senior fellow at the New School for Social Research told The New York Times.
Though many Black and Hispanic homeowners “have this asset . . . it’s going to be a struggle to keep it.”
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A new development in Port Jervis, New York is aiming to host 10 affordable homes.
Plus, read about one homeowner who feels like a "prisoner" after securing a low mortgage.