Octogenarians Get Share of the American Dream

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Star Tribune
By: Kara McGuire
March 16, 2010

The housing bust and tax credit helped these fixed-income retirees buy their first house.
Hank Schmiess waited nearly nine decades for his piece of the American Dream. Schmiess was 89 when he and his 84-year-old wife, Verna, bought their first home last year, spurred by the first-time home buyer tax credit and a still-lousy housing market that made it affordable.

Their condo is a far cry from the farmhouse they first lived in. When they married in 1946, Cavalier County, N.D., didn't have electricity, and news was delivered through a telephone party line. The two-bedroom, two-bath condo in New Brighton has granite countertops and Pottery Barn decor, heated parking and a fitness room. Verna thought it was too fancy at first. But now she wouldn't want to live anywhere else.

It's safe to say the Schmiesses aren't your typical first-time home buyers.

First-timers tend to be young couples, workers early in their careers or people who were once priced out of the market but who can afford to buy now that the home-price bubble has burst. These buyers have given the moribund housing market the shot in the arm its needed during the recession, especially among lower-priced homes. Many buyers rushed to meet a November deadline for the $8,000 first-time home buyer tax credit, which was then extended. Unless it is extended again, buyers must have a purchase agreement by April 30 and have until June 30 to close. When Congress extended the November deadline, it also expanded it to include a $6,500 credit for repeat buyers.

The Schmiesses never needed to buy before now. They farmed land they inherited in North Dakota until 2001, when they moved to the Golden Pond senior apartments in New Brighton to be closer to family. But it wasn't for them. No pets were allowed, they couldn't pick the paint colors and the laundry room was far away.

"I just wasn't really completely comfortable," Hank said.

Neither were their four children, who didn't see the wisdom in renting. "We've talked about how much more sense it would make for them to own equity in something," said their daughter Holly Donato.

During the housing boom, talk about buying a house was just that. Living on a fixed income, the Schmiesses couldn't afford total monthly housing costs that were any higher than the $1,100 or so they spent on rent and utilities. And condominiums, in buildings where maintenance and snow shoveling were left to others, while appealing, were too pricey.

The downturn changed that. A condo near their apartment was now on the market for $179,000 -- a $50,000 drop. The real estate agent in charge of the building agreed to pay property taxes and association dues for a year, paid for movers and threw in a furniture credit.

Then the government threw in the $8,000 home buyer credit and "we were able to demonstrate in black and white that it's a smart move on a cash-flow basis month-to-month," Donato said.

When the couple's son, an accountant for Wells Fargo, endorsed the deal, the couple quit dragging their feet.

Fewer than 1 percent of first-time home buyers in 2009 were more than 75 years old, according to the 2009 National Association of Realtors Profile of Home Buyers and Sellers. But as the population ages, the number of older home buyers is likely to increase.

While the past couple of years have shown home ownership doesn't always work out -- nearly 16 percent of Minnesota home owners have mortgage balances higher than what their home is now worth -- the Schmiesses believe it's a good long-term investment.

The couple's children pooled some money that had been floundering in other investments for the down payment. Hank likes that "they'll get it back someday," he said.

So instead of the rising rent they were facing at the apartment complex, the Schmiesses now pay slightly less per month for their home than they did when renting.

Their new condo is several years newer than their former apartment and rich with amenities. There's the laundry room -- Verna's "favorite room in the house" -- as well as a bedroom and bathroom for each of them, although "Mother's" bathroom is bigger, Hank teased.

The building also has a community room where 100 people celebrated Hank's 90th birthday party. Since it's close to the old apartment, they didn't need to learn a new driving route to church and their old friends can still come over. Hank has the guys over to play the card game Rook every Tuesday morning. And Gracie the kitten is a welcome addition to the family.

The couple took out a 30-year mortgage from a local bank. "Now you're going to have to live another 30 years," Edina Realty agent Don Gamble joked.

Donato chimed in: "Knowing Dad, he will."

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This page contains a single entry by Ernest Roberts published on March 19, 2010 3:44 PM.

More City Taxpayers May Qualify For Earned Income Tax Credit was the previous entry in this blog.

Supply of Foreclosed Homes on the Rise Again is the next entry in this blog.

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