West Glenwood project tests senior home market
A Glenwood Springs Realtor with over 40 years in the business is floating an option for senior citizens to get out of their current home and into a house in which they might actually be able to live out their golden years.
Construction is about to begin at the West Glenwood Estates, a four-lot, eight-unit development on Gamba Drive, just off Donegan Road, where Don Markley won city approvals for what’s being offered as a free-market senior housing project.
The duplex units are designed with those age 62 and up in mind, including wider doorways, elevators, no lawns to maintain, and larger garages with lots of room to maneuver for both vehicles and people.
There’s also the ability to convert some of what’s initially being designed as storage space into a future caregiver unit when and if the time comes.
Markley admits he’s testing the market a bit to gauge the interest level among what he refers to as “active seniors.”
At $589,000 for a home in his project, the idea is that, the older the buyer, the less down payment required with the potential for no mortgage payment at all, or a deferred payment plan, depending on the value of the buyer’s current home.
The key is in the use of a federally insured loan program called a Home Equity Conversion Mortgage, or HECM, to use equity in a home that’s already owned free and clear or for which little is still owed, and use that money to put a significant down payment on the new home.
It’s a program that allows older home owners in particular to downsize, or otherwise get into a home that will be more appropriate for their retirement needs, Markley explained.
“We had a study done and found there are 292 homes in Glenwood Springs that have been owned for over 20 years,” he said.
In many cases, those homeowners are older than 62 and own their home free and clear, Markley said. However, many of them don’t have assets otherwise to qualify for a traditional loan if they wanted to sell and buy something different that could serve their needs into their 80s or 90s, he said.
At 1,400 square feet of living space, the homes Markley is trying to sell are in many cases smaller than what the targeted buyer already owns and with fewer maintenance obligations. The senior-designed amenities are the big selling point, he said.
Ron Meier, a representative for Reverse Mortgage Funding in Denver, is one of the loan vendors Markley is working with. He believes Markley is onto something in the often-difficult mountain resort housing market.
“It isn’t a well-known lending program for home buying, and it’s been considered a loan of last resort in the past,” Meier said.
That’s changing, though, as studies show it’s gaining favor as a way to leverage retirement dollars, “to ensure the borrower has a place to call home for their lifetime,” he said.
Meier noted that many baby boomers who are at retirement age or nearing retirement haven’t adequately saved for their retirement years and are looking for more flexible payment options.
“A lot of times the challenge is that the borrower won’t qualify under traditional loans, because they may have a valuable asset, but they don’t have enough income,” he said.
The Federal Trade Commission’s consumer information website does advise that a HECM can have higher upfront costs and not everyone can qualify.
“In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get,” according to the consumer site.
Markley said he has three of the as-yet-unbuilt houses spoken for. The first units are expected to be completed by late fall or early winter, he said.
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The city of Glenwood Springs has proposed investing $5.76 million for street improvements in the 2020 budget.