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Time to Rent… or Time to Buy? You Make the Call

Category: Retirement Real Estate

June 1, 2011 — The U.S. real estate market took a severe pummeling after the long holiday weekend with the release of the latest housing figures. The widely watched S & P/Case-Shiller Index reported that national housing prices index fell 4.2% in 2011’s first quarter, on top of a 3.6% decline in the 4th quarter of 2010. Prices across the country have hit new lows since the housing crash, and represent, according to economist Mark Zandi of Moody’s Analytics on the PBS Newshour, the most “unprecedented”… price decline since the Great Depression”. Only one market, Washington, D.C., was immune to the price problems. Texas is doing relatively well compared to most markets.

After recovering a bit in 2010, prices are sinking again. More and more people have come to believe that it is a far, far better thing to rent than to pursue the dream of owning their own home. Indeed a recent survey by found that 40% of renters never intend to own a home.

A few facts
The surge in rental interest occurs in spite of data from the latest NAHB/Wells Fargo Housing Affordability Index, which suggests that homes are indeed very affordable right now; about 75% of the homes on the U.S. market today could be afforded by a family with the national median income of $64,400. (, a site for homebuyers, sellers and renters, published a Rent vs. Buy Index in January (before the most recent home price declines), which found that it is more affordable to buy than to rent a two-bedroom home in 72 percent of America’s 50 largest cities.

Many economists such as Mark Zandi and Rich Sharga believe that we have not quite reached the bottom of the real estate market. Until problems with the overall economy are resolved, there will be no return to health in housing. Unemployment, foreclosures, and confidence are all holding us back. Unemployment is part of the chicken and egg problem – housing construction and sales are a big part of the economy that is stuck on hold. Foreclosures and distressed homes sell for less than normal sales, exerting downward pressure on prices. And the confidence factor is huge – people don’t gamble on buying a home when they are afraid they might lose their job, that the stock market will go down, and when they hear that it is very difficult and exhausting to try to qualify for a mortgage. Zandi and Sharga think that the bottom might be hit some time in 2012.

Pros and Cons
This is not a definitive list – we’d really like to see yours.
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)

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.

Further reference:
How are prices in your home town?
Buy, Rent, or Stay
What to do if you are under water on your mortgage
WSJ MarketWatch article

You Make the Call
So dear members, what is your call? Are you planning on buying, renting, (or staying where you are) in retirement? What are the best reasons for each? And finally, do you think we’ve hit the bottom of the real estate market? Use the Comments section below – we all want to hear your opinion.

Posted by John Brady on June 1st, 2011


  1. i live in a 2600 sq ft house way too big for myself/husband/maltese but we cant sell due to the housing market so we are staying. we talk of moving but i do not want to live in an apt nor have to be at the mercy of a landlord. i dont want to live like a gypsy in my older age but would like the freedom of not having a home that ties me down. it is a dilemma for us we dont really know which way to go. i dont want to give up my home and then be stuck in a rental.

    by beverly rankin — June 2, 2011

  2. There are many factors that determine whether a retiree should rent or buy, not the least of which is whether or not you own your home free and clear. If I were Beverly and disliked being in such a large home, I would investigate renting out my home and buying a smaller one, since she doesn’t want to be at a landlord’s mercy and it isn’t a good time to sell.

    In my case, so far my cash flow is fine; I own my home free and clear, and it is 5 blocks from my son and grandson. So I am inclined to remain in my home unless I need the cash and start having difficulty getting up and down the stairs. If I needed cash, I could always get a small mortgage to cover a cash flow shortage.

    by Julie Gillis — June 2, 2011

  3. I too, own my home…but not free and clear. Though I expect to be there in the not to distant future.
    I can’t sell my home becuase it is now worth less than I paid for it. I like it, just wish I could move it where I want to be! I am considering renting for extended periods in places I’d like to live/visit or buying rental property – vacation rentals or similar and keeping my current house as a home base. It can stay that way until I must downsize due to the inability to care for it any longer.
    I remember the late 70’s or early 80’s when I was stuck in a house because the interest rates were so high. Eventually new ways of financing made it possible for mobility to resume. I think there will be new ways of resuming mobility created in the not to distant future as this problem touches more and more people.

    by LuluM — June 2, 2011

  4. We have a nice house in the DC area that we hope to sell in the near future. We will put the recent housing surveys to the test and see if this area has indeed avoided the major housing problems facing the rest of the nation. After much research we have decided to bank the money and rent for a while. This will allow us to check out the areas on our where to retire list. Additionally our fincial advisor notes that buying a home is not the investment of old, duh, lol :smile:. A down payment will tie up a fair amount of the equity we receive from the sale. So for the near future we will rent 6- 10 months in different areas then once we decide where to retire we will face the big decision on rent or buy. Right now we lean toward rent. But……. things change.
    Enjoy Life – no do overs.

    by Caseyg51 — June 2, 2011

  5. I am interested in renting for a year or so, before making the decision to buy, but I cannot find easily, information on places for rent. I am from Venezuela, I subscribed to this site trying to find information on places for rent in different parts of the USA, but I have little time to navegate and read. Is there an easy way to find info about rentals? Thank you

    by Sandra Edghill — June 2, 2011

  6. There are so many variables when it comes to housing it is hard to come up with a one size fits all solution. Kids/Relatives/Friends, savings, how old you are, income, weather, mobility, health, etc. all play a part in a decision about where you want to live. Each factor limits choices. Sometimes what someone considers an important factor really isn’t. People get focused on one factor and disregard all the others and wind up living lives that aren’t at all what they could be. For example living near grandkids is great, but if you end up being the go-to free babysitter 24/7 then that is a negative. To me it would be ideal to live around 50-100 miles from my grandchildren. Close, but not too close. To me living anywhere that requires ownership of a snow shovel is a negative while others can live with the problems bad weather brings occasionally.

    Renting has its good points. The main one is freedom. You are not tied down to a place. Selling a house and renting using the proceeds from the house sale is a good option. Put the proceeds in a good safe mutual fund then figure out how much you can withdraw from it each month (use an annuity formula) given how long you expect to live and what the return you expect to get from your investment. Add in what you pay for real estate taxes and other costs associated with owning a house that you will not have when you rent then that’s what you can afford for rent. And I wouldn’t even consider renting somewhere that was not limited to 55+ folks. If you can rent you can almost afford to live almost anywhere in this country or even outside this country whereas with owning a home you are extremely limited without a lot of money even with house prices down. Want to live in Provence or New Zealand for a year or two? Go for it.

    by Mad Jayhawk — June 2, 2011

  7. Rent vs Buy? My husband can’t decide if he should retire or keep working. He said if we rent, he’d be bored. We are rent now and he works four days a week. He’ll be 70 in July. And he’s undecided.

    by Mary — June 2, 2011

  8. I plan to rent. Even though it might come out costing more than owning, at my age, I don’t want the responsibility of upkeep – mowing, painting, heating, etc.

    by Diane H — June 2, 2011

  9. Even now, before I am retired, sometimes renting looks good! Less hassle – especially when the cost and work involved in maintaining a house/yard gets overwhelming at times. Sometimes it seems like “hey, it would sure be easier to just pick up the phone and call the landlord!” BUT……. some of the biggest advantages to owning are being able to do what you want to your house & property, and not worry about any rules, AND also we have pets. It’s often very hard to find a rental that allows pets. So, chances are, we would be looking to buy when we move….which will hopefully be soon, to further south.

    by Chris — June 2, 2011

  10. Mad Jayhawk, I LOVED the following comment of yours and wholeheartedly agree (particularly after having just survived the winter from h*ll here in CT where we had what seemed like about 900 ft. of snow…….) 🙄

    “To me living anywhere that requires ownership of a snow shovel is a negative”

    by Chris — June 2, 2011

  11. We sold our big house when we retired and bought a small condo on the Coast. We own it free and clear. With the money we save in 0ur new ‘scaled down’ living, we can go rent anywhere at anytime for a few weeks or a few months and use our little condo as a home base. You will be surprised at how little you need when you become ’empty nesters’…:wink:

    by Coastal Lady — June 2, 2011

  12. We sold our large home in So. Cal. recently, paid cash for a fixer on acreage in So. Oregon, bought a motorhome and banked the remainder.
    Renting will give you more flexibility in moving about,however, we like our independence without having an owner breathing down our neck.
    I always liked to maintain my place myself and even in retirement it’s one of my many hobbies.
    There has been too much emphasis in the past on appreciation of your residence but I look at it as my home which eventually will be paid off (as long as you don’t start refinancing and pulling money out)and then it becomes part of your retirement fund.
    When renting, say for $1500/month then what do you have after 10, 20 or 30 years?
    Also, forget about the tax and interest deductions. For us it never was more than the standard deduction.

    by Ernst — June 2, 2011

  13. I loved Coastal Ladies’s remarks!

    by Landlady — June 2, 2011

  14. This comment is for Sandra Edghill: Look up rentals on Choose a city/state and you will see lots of them. I just used it to help a grandson get a nice rental on the coast while he attends school. My husband and I are in the process of moving to a city in Nevada and found the short sales and foreclosures were way down, but as they go down, the rent on rentals goes up. We are investigating every avenue to see what is best for us.

    by Magnoliasouth — June 2, 2011

  15. I’ve been paying rent for way too many years with absolutely nothing to show for it. Even if housing prices continue to go down, if I buy now, at least I can start building some equity and save on my income taxes. I’ll be 57 in August and hope to find a decent property I can pay off within 15 years. (If I had enough to pay 100% cash, I would.) Self-employed for just a few months, I’ll either have to get back on a W-2 to qualify for a traditional mortgage or do an owner finance or lease purchase for the next year or two, then refinance my own mortgage loan (or rent for another year or two and then buy, if it still makes sense to me). There is some risk and less flexibility, but I just feel like I’m wasting too much on rent.

    by sisterbabymama — June 2, 2011

  16. Sandra Edghill: You can also find homes for lease on com. Just be sure to check the Lease Option checkbox when you do your search.

    by sisterbabymama — June 2, 2011

  17. I will definitely rent prior to buying. If possible, I will try to lease with an option to buy. Sometimes a dream relocation turns into a nightmare.

    by belleboy — June 2, 2011

  18. When renting, as has been alluded to, you are paying all of the landlord’s expenses (unless you are in a rent control situation, which is rare in most places) plus some profit unless said landlord is oblivious or totally mismanaging their investment. Renting or visiting friends or relatives is an obvious way to check out areas before committing although not always an option.

    Being nascent NE snowbirds we bought a condo ub Florida a couple of years ago and while we occasionally look at properties to purchase (chronic lookers) the maintenance during the seasons of non-occupancy can be problematic and in a condo situation you are usually trading your bearing the expenses and managing those responsibilities directly by paying someone else to worry about those details for you.

    Of course not all managers and landlords are competent and concientious or efficient in their use of your payments and fees. And then, in older condo units, you may have people whose fixed incomes are not able to keep up with the kind of fiscal messes we are now experiencing who would prefer to defer necessary maintenance without realizing that paying “later” will inevitably be more expensive. As our ages advance our infirmaties frequently do not allow us to continue performing property maintenance at the levels that maintain market values, depressed as it is. It is a buyers market in most places now. In many cases it comes down to what you can or choose to afford and what you are able or willing to handle instead of paying someone else to do it for you.

    by tomaprit — June 3, 2011

  19. I can’t seem to win when it comes to home ownership. I’ve owned 4 properites in my life, but everytime I make a profit, the next bust cycle kills it. I’ve finally figured out I should be a renter. I don’t like being stuck in one place, I don’t like trying to take care of yardwork and housework on my own, and don’t like devoting all my energy and money to a house. We moved around a lot, so it’s not like my daughter grew up in any particular house. I just sold my last house (at a loss, of course) during that $8000 tax rebate time period, and I’ll probably rent for the rest of my life. I can have a life outside of mowing the grass, and that’s important as the days in your life dwindle.

    by Susan — June 3, 2011

  20. As far as cost, the maintenance of a home is a huge part of the expense, nevermind the mortgage and taxes. I want to live in a nice area in a home that looks good, which I can’t do on one income. I’ve owned condos in the past, and it me that’s like being stuck in an apartment that you’re paying the upkeep on. The association controls the shots, so you may as well rent and avoid the hassle of selling. I’m renting in a beautiful town that I could never hope to live in if I owned, and that works for me. I look at how my 80+ year old parents are struggling trying to maintain their large home and acreage, and that’s not for me!

    by Susan — June 3, 2011

  21. The “no one size fits all” comment is certainly born out by the variety of comments, however the fact that caught my attention was the statement made in the reference to the NAHB/Wells Fargo Housing Affordability Index. While 75% of the homes may well be affordable for a person making the national median of $64,000/year, the median is not an average. I believe we would have to see where the median income falls on a bell curve of actual income figures before the statemant would be valid or have any bearing on the real world housing situation.

    by Greg — June 3, 2011

  22. If you don’t own your home how do you actually feel comfortable in retirement?
    Rents will go up far more than social security payments or what other fixed income you have available. Best to buy and own your home as food and other costs will rise and cut into your retirement income. Why add higher rents to that which you will never control?

    by Bill — June 4, 2011

  23. There seems to be a shortage of reasonably priced senior apts in the NC area. I am researching apts looking toward retirement in the next 5 years.

    by Donna Hott — June 6, 2011

  24. Ditto to Coastal Lady!!!!

    by Ponce — June 6, 2011

  25. I found all these comments really interesting. My wife and I are certainly not rich, with full time earnings now peaking at less than $80m. But we believe that it isn’t so much ‘how much money you make’, but ‘how you spend your money’ that is important when trying to live within your means. For us, renting would be like leasing (renting) a car, which would also not give us anything to show after paying the money. We also enjoy Suze Orman and Till Debt do us Part, every Saturday evening.

    Seems that so many people we know have added and added to their houses while the kids were home, and as empty nesters now have oversized homes on their hands. We have spent much in dollars and time for needed upkeep, but now with the kids gone, we have an efficient home in the city for the two of us while our work life winds down.

    We have lived in MN all our lives, own a 3 bedroom home in the metro area, and have enjoyed working for years on improving our 2 bedroom cabin in northern MN, after building and finishing it ourselves.

    We are now nearing retirement, and 2 years ago purchased another home in Phoenix, to get away from winters. Our move (winters) to Phoenix decision was based on weather getaway, and economic features. Storms are getting too prevalent for us in other areas of the country, including MN. Humidity is an issue in MN summers, but seems to be more of an issue from Texas to Florida. I just can’t take that humidity any longer, and take the opportunity to blame my prescriptions on that whenever I can.

    The Phoenix home is 6 years old, cost us less than $90m, and total costs for that home is just under $5000 per year. That number includes all utilities, insurance, association dues, taxes, even bug/weed spraying, Internet and cable (without the movie channels and super duper high-speed Internet). The house is energy efficient, stucco/tile, and though it is a small lot, and 2 car garage, it is efficient for us and company, with 4 bedrooms, desert (no lawnmowing) landscape. The $75 per month association dues clinched things for us, we look forward to living fulltime in AZ when we get tired of the yearly travel back and forth to MN. Until then, the drive is like a twice a year vacation for us. Our lake cabin we close entirely, no heat, no water, etc. for that cold time of the year.

    We really look forward to leaving the congestion and cost of living in the city, and will just probably break even when we sell our city house. The other two are paid for, we never took out loans for our cabin, and we refinanced the city house to by the AZ place.

    It seems to cost so much more to live in the metro area of MN when we add everything up. I would recommend that if looking for homes or condos, pay attention to those association dues, in addition to taxes. As you can see, we pay attention to what a home will cost us per year, in detail, and we do know that unanticipated expenses of owning a home will surface too. If buying, verify you have some nice neighbors, go ahead and knock on some doors before you make an offer, it might help you learn more, or learn to check out another neighborhood. Good luck, and thanks to all that have shared their perspectives on this topic, it makes for some great reading.

    by Dave (from MN) — June 6, 2011

  26. As a former Realtor I would like to point out that it is not important how much you are “losing” if you sell your home. What to consider is, Can I buy a new home where I would be happy for the same amount that I can get for my present house? It’s very important to make sure you can afford a property in a new location, duh! We used VRBO to find a nice house to rent while we were exploring a new area. You people who live in high priced markets are very fortunate to be able to sell your house, buy a new one and most likely have cash left over for travel or other purposes. For us it’s where can we afford.
    Right now the RE market has to be near bottom. I would feel like a fool if I spent $18K/yr on rent while I watched home prices increase. You’d also feel bad watching your money disappear if values decrease, but really in most markets how much lower can they go?

    by Bob L. — June 7, 2011

  27. I think owning a small single family home free and clear makes the most sense. Find a low maintenance and easy to care for small home. Owning provides a lot of security. Rents will continue to rise. As a person ages and their health begins to fail, at least they own the roof over their head.

    by Bob — June 7, 2011

  28. We have only been married for 20 years and lived 15 of that in Chicago my hubby is about to retire next year. we have rented most of our lives and wish we had a home sometimes but every neighborhood we moved from has gone bad so it might of been a good that we did not buy. We pay very high rent now because we still reside in the same county as Chicago very high in the nation.

    We don’t have a lot of cash to work with so we are looking at Mobile homes or condos in downstate Illinois or Indiana it is a lot cheaper to live there than here. But we are open to move just about anywhere without a lot of humidity (I have spinal arthritis).

    I like the mobile homes we have looked at they are very nice and most are energy efficient. We will be on a limited income because his union had cut his pension by half.

    Any good ideas on places for reasonable 55plus mobile home parks or any for that matter besides site?

    by Terry Lou — June 11, 2011

  29. I bought my retirement dream home and a few years later I lost my job of 15 years. When I got behind on the payments, my brother decided to move in with me (we are both single)to help avoid a pending foreclosure. The week before his move, he passed away. I lost my home. I am now renting a small 2Br/2BA apartment with no lawn/building upkeep which saves me so much time, money & labor. Each of my four children wanted me to move in with them, but at 63 I feel I’m too young for that yet! I work part-time and with my early SS income it’s enough to pay the rent, utilities, car payment plus a few other bills. If I find a full-time job or 2nd part-time job, I can be debt free within 2 years. Down-sizing and getting rid of so much excess “stuff” has been a big weight off of me and I plan to keep it that way. Who knows, I may decide to move back home to Central Florida and the least I have take with me, the better. Bottom line; I’m happy, I’m healthy, and I no longer have a big mortgage payment to worry about (my rent & utilities are less than what my mortgage payment was).

    by Jeannie Reynolds — June 12, 2011

  30. A new rental model is to outfit some hotel rooms more like tiny condos – you can live/try places out a month or few months at a time. You’d have the daily maid service, and of course most hotels have restaurants, too, as well as elevators and perhaps a newspaper delivered to your room each day. Your bed would be a sleep sofa, you’d have a desk for your computer, and more storage for your clothes than a typical hotel room. Sound enticing?

    Jan Cullinane, Co-author, The New Retirement: The Ultimate Guide to the Rest of Your Life (Rodale)

    by Jan Cullinane, co-author The New Retirement: The Ultimate Guide to the Rest of Your LIfe (Rodale 2007) — June 13, 2011

  31. i have been in the same situation whether my family should rent or buy. this is really a tough decision to make since each has its own pros and cons

    by ally — September 14, 2011

  32. […] explored in “Baby Boomers Want in Their Retirement Home“, had 36 comments. “Is It Time to Rent or Buy” brought in 31 […]

    by » Top 10 Retirement Articles for 2011 Topretirements — December 26, 2011

  33. This comment came in from Bob H:

    Have you ever done an article on the option of renting over owning upon retirement? At my age (68) if I was a home owner and inclined to move to a different part of the country, I believe I would rent a condo or townhome for a year. Many of us have stated on vacations “wouldn’t it be great to live here?”. Before I would take that major step and buy a home in that new area, I believe I would like to “experience” living there for a year. AND if I did decide to move back to my hometown I would seriously consider renting and not buying. At my age I no longer care about building equity as I do about the increase of property taxes that never go away. Your thoughts?

    by Editor — March 20, 2015

  34. I would love a discussion on renting out our home for a year or two while we search for our ideal retirement spot or sell our home and put our equity in a savings account/market. Our home value continues to rise yearly and will sell in a weekend. We live in a very hot market. We could also rent our house for double out mortgage payment. It bothers me to not be in the real estate market now and lose out on equity growth. We however cannot buy elsewhere until we sell our house.

    by Becky — April 22, 2015

  35. @Bob H: If you think that rising property taxes are not included in the rent you pay, you are mistaken. Those who are renting to you need to cover their costs. The rent will rise as the property taxes rise. Also, in most places, non-homestead property (that which is rented out, not occupied as a primary residence by the owner) is taxed at a much higher rate.

    by Linda — April 23, 2015

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