Seniors balk at home buy-ins for retirement
By Tim Bryant St. Louis Post-Dispatch
ST. LOUIS — Vernon Weiss balked at selling his house to pay for a retirement community’s six-figure entrance fee, joining a nationwide trend that is changing the continuing-care industry.
Like Weiss, many retirees can no longer afford a large down payment in such a community because they are unable or unwilling to raise the money by selling their homes in a down market.
Weiss, 83, said he examined nine retirement communities but immediately turned down those that sought a large buy-in. He and his wife, Marion, 85, moved this summer to Crestview Senior Living, a 132-unit complex that opened last year in Crestwood, Mo.
Crestview is run by Denver-based Spectrum Retirement Communities, which has 17 retirement complexes in eight states. Instead of demanding a lot of money up front, Spectrum charges residents monthly rent. Dan Decker, a former Erickson official who works now as a Spectrum vice president in St. Louis, said many retirees reject the idea of paying $200,000 or more to get into a retirement complex.
“Most seniors or their families do not want to pay these large buy-in amounts because of the reductions of their personal investments and savings,” he said. “In addition, many have to sell their house to afford these large fees and the lessening of the housing market has reduced their sale price.
“They want to retain their savings and believe it is better for them to control their own finances. The recession has refocused all of us to take control of our money.”
Decker said the monthly retirement home rental is the “wave of the future, especially in this economy.”
“Buy-ins won’t come back because the housing market will never come back to where it was three years ago,” he added.
Decker said Crestview never demanded buy-ins because Spectrum saw that requiring a lot of move-in money up front in a dismal housing market would exclude many retirees.
Or as Weiss put it: “I couldn’t afford to make a large buy-in. And even if I could, I’d hesitate. Why should I give them my life savings and let them use it for their benefit?”
He and his wife pay $3,450 a month for a 1,000-square-foot, two-bedroom, two-bath apartment with a living room and kitchen. The monthly rent includes meals, classes and other activities.
Such an alternative doesn’t bode well for traditional retirement community operators.
Among the struggling firms is Erickson Retirement Communities, which canceled plans this year to build a $400 million complex of restaurants, a chapel, a health club, nursing facility and 1,500 apartments on 84 acres in Affton, Mo. Some industry analysts said Baltimore-based Erickson, which manages about 20 retirement communities nationwide, will likely file a voluntary “pre-packaged” bankruptcy.
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