An interesting phenomenon among seniors who are selling their home is their changing attitude about buying another. Younger home sellers are typically focused on quickly buying another home. Their lifestyle has changed and they need to sell and buy another.
Most senior sellers will become senior homebuyers but there is an increasing trend among seniors selling their home: They don’t intend to buy another home and they are making the decision to rent.
“I think we’ll rent for a while” is an increasing response to my question: “Have you thought about your next home?”
Rent? Here are folks who have worked hard all their lives to pay off the mortgage so that they could enjoy retirement in their own home and now they want to rent?
Isn’t renting for the economically challenged, the young millennials, the unstable? Why throw money away renting when equity-rich seniors can sell and buy the home of their dreams?
The homeownership rate for seniors has been declining for the last 10 years as an increasing percentage chose to rent rather than own a home. A recent national survey of seniors who rent were asked the question: Why?
One-out-of-ten planned to buy a home within the next 6 to 12 months, about half could not afford to buy but four-out-of-ten responding seniors who could afford to buy, won’t. They’re content to remain tenants.
Why do you suppose more seniors are choosing to rent than own?
Replacement home too costly
Most seniors who are selling say that they would like to downsize into another, perhaps smaller, single-level home, closer to shopping, medical facilities and family. We have homes meeting that description in our county but they are usually higher in price than the market value of a senior’s existing home.
If family is in the region, perhaps relocating to another state is not an option. Faced with reinvesting all their sale proceeds and perhaps the obligation of a new mortgage, many choose not to sell their home or if they sell, they will rent.
Demands of homeownership
Often seniors don’t have the same physical strength at 60 as they did at 40. Some seniors are physically unable to maintain, remodel or repair everything that’s routinely necessary.
Rural properties require even more attention. Whether clearing brush or mowing the back yard, it takes good health and energy to maintain a home.
Renting is cheaper
Despite what the real estate community would have you believe, every homeowner knows that at the end of the day it’s more expensive to own a home than rent one.
Absent a mortgage, homes are still expensive to maintain. Ask anyone who has had to replace a leaking roof, a new HVAC system or replace a deck.
Retirees likely have less income than when they were working and many depend upon Social Security as their primary source of income to pay household expenses. Renting may not be the lifestyle they would prefer but it is one that they can afford.
Been there, done that
While some seniors enjoy puttering around their home with projects and working in their yard or garden, many don’t. They have spent a lifetime tied to their homes with the responsibilities of ownership while their friends have been vacationing. These seniors do not want another long-term commitment to a home. As tenants, mobility finally becomes an option.
Fear of another real estate bubble
Most of our grandparents never psychologically recovered from the Great Depression. They became compulsive savers, skeptical of debt and leery of investing in the stock market.
The 2008 Great Recession and the collapse of home values left a similar impression on many retirees. They have personally experienced how quickly the value of their home can disappear. They have watched helpless as friends and neighbors lost their home to foreclosures. They know first-hand that the real estate market has up and down cycles and they are not going to get caught in another.
There are 75 million baby boomers who are on the verge of retirement. For the next 20 years an average of 10,000 people each day will reach age 65, which has historically been the retirement phase of life. What’s fascinating is after a lifetime of homeownership more are choosing to rent.
For more information on apartments in Glen Allen, VA contact The Gardens.