Renting vs. Buying – Which Is Better in Retirement?

Category: Retirement Real Estate

April 29, 2016 — One of the biggest considerations most Americans face is determining if, and when, it makes sense to buy a home. In retirement, however, the question becomes a different one: “Should I remain a homeowner?” Nationally, one recent study found it is more cost effective to buy than rent. But what about for retirees? In a recent article Trulia found that it is 41.8% cheaper for retirees to buy than rent in all major US metros.

We were very pleased that Trulia reached out to Topretirements for this article, providing us with custom data for our Top 10 Most Popular Places to Retire. This data, presented further down in the article, will give you good insight into the buy vs. rent conundrum for many top retirement spots. You can read their entire rent vs. buy report, “Best Places for Retirees to Rent or Buy.”

Some of Trulia’s general findings:
· Nationally, buying is slightly cheaper than renting compared to last year. Locally, buying ranges from being 52.3% cheaper than renting in New Orleans versus just 14.4% cheaper in Honolulu.

· For retirees, buying is cheaper than renting in all major metros by 41.8% At the city level, Florida offers the best deals on purchasing a home over renting, and popular retirement communities such as Sun City, Ariz., and The Villages, Fla., offer some of the widest margins.

. The 2 U.S. Metros where it is most cost effective to buy rather than rent are both in Louisiana – New Orleans and Baton Rouge, where it is 53% and 52% respectively cheaper to rent. Florida had 2 Metros on the Top 10 Buy vs. Rent list from Trulia, Fort Lauderdale and West Palm Beach.

Cost of renting vs. buying in U.S. cities with highest 65+ population
The chart below contains some great data on the cost of homes, rents, and the buy vs. rent comparison. The Villages in Central Florida offers the greatest advantage to buyers.

The Topretirements Top 10 Most Popular Places to Retire
Here is information on home prices and rental costs for the Top 10 Most Popular Places to Retire at

If You Don’t Have, Or Like Your Heirs, Renting Might Be the Better Choice in Retirement
The Trulia rent vs. buy equation takes into account the value of the equity in your home when you sell. The reality for most retirees is that their retirement home will likely be last home they’ll purchase, so any remaining equity in the house will be passed on to heirs. But what if you don’t have any, or don’t care to pass on anything to the ones you do have?

Omitting the value of home equity in the rent vs. model, it’s actually more expensive to buy a retirement home than rent one in 98 of the 100 cities with the largest 65+ populations. The only two cities where it’s cheaper to buy are the The Villages, Fla. and Danville, Va., where it’s 14% and 7.1% cheaper, respectively. See more at trulia.

A word about Trulia’s methodology
Trulia used a number of financial assumptions to calculate its renting vs. buying figures. You should know them to see if all apply to your situation. Some of them include:
– Quality-adjusted measure of home prices and rents looked at median home value and rent in March 2016 in each of the largest 100 metros.
– Total monthly costs of owning and renting, including mortgage payments, maintenance, insurance, and taxes.
– Future total monthly costs of owning and renting, taking into account expected price and rent appreciation, as well as projected inflation.
– One-time costs and proceeds including closing costs, down payment, sale proceeds, and security deposits (Trulia assumes retirees won’t move as often as younger people).
– Net present value, which reveals the opportunity cost of using money to buy a house instead of investing it.
Here is where you can see the full Trulia Methodology

Pros and Cons
There are also other factors beyond the economic ones. Here are some of the renting vs. buying advantages and disadvantages we have discussed in prior articles (see Further Reading below).

Pros of Buying a Home:
– Pride of ownership- the American Dream
– Possible appreciation
– Tax breaks
– Independence and permanency – fix it up the way you want it
– Cheaper (maybe)
– You are in control and don’t have to look for a new place to live (very important in snowbird rentals)

Cons of Buying a Home
– Prices might go down
– Hard, if not impossible, to get a mortgage
– Risky: fire, tornado, hurricane, flood, neighborhood goes bad
– Interest rates go up
– Tax benefits could be taken away
– If you don’t like the state, town, or neighborhood – or your grandchildren move – it’s easy to pull up stakes.

Healthier people more likely to own than rent
We are not exactly sure of all the reasons why (other than economic), but among adults aged 65 years or older, 34% of renters reported fair or poor health compared with 19% of homeowners in that age group. (Source – QuickStats: Percentage of Adults with Fair or Poor Health, by Home Ownership Status and Age Group — National Health Interview Survey, United States, 2014. MMWR Morb Mortal Wkly Rep 2016;65:385. DOI: ).

For further reading:
Buy, Rent, or Stay
Rental Frustrations Lead to the Snowbird Dilemma: Rent or Buy
How to Find a Vacation Rental for Your Retirement
How Anyone Can Find an Affordable Warm Winter Retirement
Your Best Place to Retire Might Be a Rental

Comments? Have you explored the idea of buying vs. renting? What did you decide to do – and what factors did you consider? Are you happy with your decision?

Posted by Admin on April 29th, 2016

Renting Frustrations Lead to the Snowbird Dilemma – Rent or Buy?

Category: Retirement Real Estate

March 14, 2016 — Every year about this time a significant segment of the snowbird population, the portion that rents instead of owns their own place, share a common worry. The concern boils down to this simple question – where on earth are we going to stay next winter? In this article we will attempt to explain the many issues that come into play when boomers go about seeking a snowbird rental, and how those factors often drive them to start thinking about owning a place vs. continuing to rent.

The rental worries
Here are some of the major problems that repeat snowbird renters can face – assuming they were lucky enough to find a rental (more…)

Posted by Admin on March 13th, 2016

Are You Ready to Join the Tiny House Movement in Retirement

Category: Retirement Real Estate

July 13, 2015 — Some people dream of retiring in an expansive home with plenty of room for hobbies, friends and grandchildren. And others can’t wait to downsize, get rid of 40 years of accumulated “stuff”, and live in a manageable-sized home. This article is dedicated to those interested in the latter, especially to the folks who want to take it to a small extreme. The end of this feature had many resources to find out more about the tiny homes movement along with examples of – from TV shows to a Netflix documentary.

The average new single family home has grown and grown. In 1978, according to Wikipedia, it was 1,780 square feet (165 m2), but, despite a decrease in the size of the average family, the average home had bloated to 2,662 square feet by 2013.

Small… and then there is Tiny!
The small house movement generally refers to houses of less than 1,000 square feet. Tiny houses take that further, and are less than 400 sq. ft., with some (more…)

Posted by Admin on July 13th, 2015

It’s Official: The Top 15 Builders in the Top 50 Retirement Markets

Category: Retirement Real Estate

June 9, 2015 — We were very flattered recently to see a story from, “The Top 15 Builders in 2015’s Retirement Magnets“, which used Topretirements’ “100 Most Popular Retirement Towns” as the starting point of its research. The online publication basically looked at our top 50 towns (chosen on the basis of visitor popularity on our site), and then determined which companies build the most homes in those markets. It was an intriguing idea with at least one very big surprise.

Quantity Built
Let’s start with a big surprise: the #10 builder is…. Habitat for Humanity. So at least we know from the beginning that there all kinds of builders in our 50 most popular retirement markets – not just those catering to the retirement set. The builder with the most (more…)

Posted by Admin on June 8th, 2015

Midwest Dominates Most Affordable Housing Markets in USA

Category: Retirement Real Estate

May 15, 2015 — Looking for a place to retire where your housing dollar gives you the biggest bang? If so the National Association of Home Builders/Wells Fargo Housing Opportunity Index, which ranks U.S. metros by housing affordability, might just have your answer. All of the top 10 most affordable markets are in the Midwest or Northeast, not such great news for retirees looking to retire in warm weather. The price of homes in these Metros ranges from a low of $75,000 (Springfield, OH) to a high of $105,000 in Sandusky, OH. Another problem with these “most affordable” Metros – none of them has inspired us enough to write them up as interesting (more…)

Posted by Admin on May 15th, 2015

Housing Markets Making Forward Progress

Category: Retirement Real Estate

This article contains information from the NAHB on 2 topics: progress toward recovery in the housing market and the list of finalists in their 50+ housing category awards competition.

WASHINGTON – Markets in 59 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the third quarter of 2014, according to the National Association of Home Builders/First American Leading Markets Index (LMI) report from November. This represents a year-over-year net gain of seven markets. Based on current permit, price and employment data, the nationwide average is running at 90 percent of normal economic and housing activity. Meanwhile, 66 percent of markets have shown an improvement year-over-year.

“The markets are recovering at a slow, gradual pace,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “Continued job creation, economic growth and increasing consumer confidence should (more…)

Posted by Admin on December 8th, 2014

Are Time Shares Part of Your Retirement Strategy?

Category: Retirement Real Estate

October 30, 2014 — Our member Louise recently started an interesting conversation about time shares on another of our posts. Then Caps suggested that we begin a Blog post on that topic. Seems like a fine idea, since we know that many retirees rely on time shares, aka Interval Ownership units, as a way to make their retirement life more enjoyable.

Time Shares – Different Strokes
Many folks have 1 or 2 time shares that they look forward to using every year. Some have additional weeks in different locales and time periods. Others we know have consecutive weeks in the same locale/complex, which allows them to stay in a favorite place for a long period of time. And then we know others who not only have consecutive weeks, but have multiple units at the same time so their children/grandchilden can visit.

How time shares get used also varies. Some folks stay (more…)

Posted by Admin on October 30th, 2014

Should You Buy a Home for Retirement with a Swimming Pool

Category: Retirement Real Estate

September 16, 2014 — One of our members, Caps, posted this question on another Blog topic, the results of our recent Retirement Confidence survey. SandyZ suggested that since it generated a fair amount of discussion, we move the swimming pool conversation here to give it its own place. Good suggestion!

Another question for the other readers…. There hasn’t been a blog addressing this issue that I am aware of.
We plan to purchase our retirement home next week. We will be choosing from 5 that intrigue us. One home has a full underground pool, one has an above ground pool with decking, one has a swim spa (swimming against jets, plus a hot tub all in one unit 16?), one has a regular hot tub that seats 6 and one has no pool or spa, but a great location.
So the question……do any of you have any experience with pools or spas? We do not, however believe it would be a good feature for exercise as we age. We live so far up north, owning and heating a pool seemed nonsensical to us. We are planning a relocation to eastern TN, where water features are quite common.
We could really use some advice and help with our decision. We have no idea how any of these choices would affect our budget. PLEASE HELP

Posted by Admin on September 18th, 2014

Baby Boomers Finding it Easier to Sell Their Homes: Builder Confidence in 55+ Market Highest Since 2008

Category: Retirement Real Estate

WASHINGTON, May 8 – Builder confidence in the single-family 55+ housing market for the first quarter of 2014 reached the highest first-quarter reading since the inception of the index in 2008. That’s according to the National Association of Home Builders’ (NAHB) latest 55+ Housing Market Index (HMI). Compared to the first quarter of 2013, the single-family index increased 4 points to a level of 50, which is and the 10th consecutive quarter of year over year improvements.

Good news from baby boomers fueling the market
“There are many factors contributing to the (more…)

Posted by Admin on June 2nd, 2014

Snowbird Rentals for Next Winter – Going, Going, Gone!

Category: Retirement Real Estate

May 28, 2014 — We hear a lot of anecdotal information about snowbirds having problems finding a rental for the upcoming 2014-2015 winter season. The issue mostly goes back to the harsh winter we just ended, which has motivated more people to look for a winter break down south. Exacerbating the problem is a bumper crop of retiring boomers who are entering the rental market.

We know of one couple who gave up looking in Bonita Springs (FL) because they couldn’t (more…)

Posted by Admin on May 28th, 2014
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