The benefits of owning a new home are numerous, whether you’re a first time home buyer or a retiree. New home owners avoid rising rental rates and the upkeep or costly repairs of an older home. As more empty-nesters put their home on the market, they’re considering which housing options make the most sense for financial stability during retirement. Jane Hodges, for The Wall Street Journal, weighs the pros and cons of the rent vs. own question facing retirees.
Rent or own? It’s a question many young adults face as they try to find the right balance between their housing needs and financial situations.
These days, many older homeowners are grappling with it, too.
Home-sales data and anecdotal evidence suggest that more baby boomers are putting for-sale signs on their homes this year, seeking to unlock the equity they have regained since the housing downturn.
They are selling more this year than in the last two years,” says Heidi Kelley, an agent with Keller Williams Leading Edge in Providence, R.I., who specializes in the senior real-estate market.
The National Association of Realtors, too, says the median age of home sellers has risen to 54 from 46 since 2009, an indication that empty nesters who were waiting for a housing-market recovery are starting to list their properties.
Of course, planting a for-sale sign in the yard raises the question, “Where to next?” And for baby boomers—especially those with oversize houses and inadequate savings—it is a decision that could have a major impact on how they fare financially in retirement, some experts say.
Although investors have been told for years not to think of their primary homes as investments, having a healthy chunk of home equity can make a big difference when it comes to planning retirement finances.
“If retirement savings present the risk of a shortfall, one of the best things you can do is liquidate real-estate assets,” says Christine Benz, director of personal finance at Morningstar Inc. “That’s more palatable than hearing you need to keep working until you’re 72.”
Andrew Carle, executive in residence at the Senior Housing Administration program at George Mason University and a senior housing researcher, says it is important for older consumers to consider their needs not just for the next few decades, but for the final one-third of retirement.
Read the full article: Should Retirees Rent or Own? – WSJ