How Many Years of Senior Housing Is Your Home Worth?
Moving to a senior living community is a major financial decision regardless of your current care needs. Many families count on the sale of their home to at least partially fund their years in senior housing and care. How far could your home sale take you?
A Place for Mom, the largest senior living referral service, teamed up with Redfin, a national real estate brokerage, to find out. It turns out senior living consumers in areas with higher home prices benefit most from a home sale.
It Depends on Where You Live and How Much You Still Owe
In some cities, selling your home could fully fund senior living with money to spare. In others, a real estate windfall won’t last a full year. On average across cities and types of care, a median-priced home sale could fund nearly five years of senior living at a median cost of $50,000 per year nationally.
The Less Care You Need, the Further Your Home Sale Takes You
To put our findings in context, it helps to understand the main types of private-pay senior living communities available, listed below in order of increasing care costs.
Independent Living is for independent seniors seeking community. Rent typically includes individual apartments, transportation services, up to three meals per day, weekly housekeeping, and limited in-home assistance as needed.
Assisted Living is for seniors who need daily assistance with personal care. Rent typically includes private and semi-private suites, medication management, assistance with personal care, all meals and housekeeping, and 24-hour access to caregivers.
Memory Care is for seniors with moderate to advanced cognitive impairment. Memory care is like assisted living with specialized memory care services and programs, specially trained staff, and secured environments.
Independent living charges include rent only (including utilities, meals, maintenance, and amenities). Assisted living charges are about 1.5 times greater than independent living with a third of the costs going to care. Memory care is about twice as much as independent living with costs split evenly between rent and care.
So we should expect a home sale to fund fewer years of assisted living than independent living, and fewer still for memory care. While that seems obvious, many families fail to account for their likely future care needs when planning for retirement. Work with a healthcare provider to understand your health risks given your current health status and your family’s health history. Then adjust your expectations accordingly. Of course, a healthy diet and frequent exercise will further your chances to minimize care costs, too.
How Far Your Home Sale Takes You Depends on Where You Live
Combining Redfin data on median home sale prices with median senior living cost estimates from our Senior Living Cost Index, we calculated the number of years of senior living a home sale is worth in 162 cities, and for each of the major care types.
The table below shows your home sale will go further in cities with higher median sale price. For example, selling your home in San Francisco could pay for 22 years of independent living, even with three-percent annual growth in senior living costs. Selling your home in Hartford, Connecticut, however, will pay for less than a year of independent living.
Why a Home in A Pricier City Is Worth More Years of Senior Living in the Same Area
Because the prices of homes and senior housing are both tied to local living costs, you might expect a home sale to be worth roughly the same number of years in senior living regardless of where you live. Yet selling a home pays for more years of senior living in more affluent cities for at least two reasons.
Sale prices vary much more by city than senior housing costs. On average, a city’s median senior housing costs are 10 percent different than the average city. Yet a city’s median home sale price is on average 68 percent different than the average city’s median sale price.
We provide median sale price at the city level, but senior living costs estimates for the greater metropolitan area. The link between home price and senior living costs would be a bit tighter if we gave both estimates at the city level. Yet senior living consumers in a major city tend to broaden their search to nearby cities and suburbs. We broadened the scope of our analysis accordingly.
Mapping the Senior Living Value of Home Sales
You learn more about the senior living value of median home sale prices by putting it on a map. Below you see cities colored redder for higher home prices. Larger circles mean a home sale will pay for more years of senior living. The circles are redder and larger in affluent coastal cities, especially cities in coastal California.
Tap a circle to see median home prices and the years of care they could fund in that city.
Taking Home Equity into Account
Up to now, our estimates assume all older homeowners own their home outright. Yet around 35 percent of adults over 65 still owed on their home loan in 2013 according to the 2013 American Housing Survey. Half of those older adults who did not own their home outright still owed around 48 percent of their home’s current value (although this may have crept down since 2013 as the housing market recovered).
Below we show the number of senior living years a home sale could purchase under three equity scenarios in each city, averaged across care types. The more you still owe on your home loan, the fewer years of care your home sale can get you.
What to Do If Your Home Sale Won’t Fully Fund Senior Living
On average, older adults move into senior living communities at around age 85, making their remaining life expectancy around seven years according to the Social Security Administration. The average stay in assisted living is around 20 months according to the 2016 State of Seniors Housing report from the American Seniors Housing Association. In nearly 90 percent of the cities we looked at, you won’t be able to fund seven years of care with a home sale alone. In six cities, you won’t be able to fund your expected length of stay in an assisted living community. Note that these figures assume you own outright a home at the median sale price in your city.
To explore your options for financing senior housing and care, check out our Caregiver Toolkit.
How far into senior living your home sale will take you depends largely on where you live. Senior living consumers in affluent cities can fund more years of senior living because senior living costs do not vary as much geographically as home prices. If you live in an affluent city and own a home, you could potentially fund your entire stay in senior living by selling. If you’re not so lucky, you should explore additional options to fully fund senior housing and care.
- Sale prices are provided at the city level and assume five-percent selling cost for each city
- Because many senior living consumers end up moving to suburban areas where there is more senior housing supply, senior living costs are provided at the metropolitan area level
- Years of senior living are calculated assuming three-percent annual growth in senior living costs regardless of care type or city
We Can Help! Our local advisors can help your family make a confident decision about senior living.