The NYT reports that fewer elderly people are moving into assisted living facilities even when their health would make it desirable, because they are having trouble selling their homes. Add this one to the "who could have known?" list. This is yet one more entirely predictable consequence of Alan Greenspan's "bubbles are cute" policy. Of course some hard questions should be asked of the experts cited in this article, like "how could you not have seen this coming?" In fact, even if the housing market were not in a bubble it would be desirable to promote more rental options for seniors for precisely this reason. Housing is always an illiquid asset and for most people it is their major source of wealth. If a person's health were to suddenly deteriorate and require them to move into an assisted living facility, they could be forced to sell their home at a large loss. Sound government policy would promote rental options so that seniors would not feel the need to buy or stay in the homes they already own in order to have good secure housing. It would be helpful if the media could find housing "experts" who understood such basic points.
--Dean Baker
