Survivor is a long-running TV show that acted as the catalyst for the reality TV explosion that occurred in the early 2000s. There have been more Survivor seasons than humans have fingers and toes, going by names such as Survivor: Heroes vs. Villains, Survivor: Redemption Island, and Survivor: Blood vs. Water. Apparently, each different season puts a slight twist on the overall format of the game. That is what is going on with the housing market related question of whether to rent or buy, otherwise known as the gift that keeps on giving.
There is Rent vs. Buy: Millennial Edition, Rent vs. Buy: Luxury Homes, and Rent vs. Buy: City or Suburbs, but now we have a new addition to the lineup, Rent vs. Buy: The Retirees. It may seem excessive, but there are far too many variables to make a blanket statement about whether it is better to rent or buy a home across all age groups, price points, and locations. For example, this version of the rent vs. buy debate has a major factor not involved with, say, a millennial version of the question: The decision could affect whether or not retirees have enough money to last for the rest of their lives without additional income.
As the Wall Street Journal reports, more Baby Boomers are selling their homes this year than in prior years to unlock the equity they have regained since the housing downturn, which means more and more people of retirement age are going to be moving on to their next abode shortly, but will it be a rental or another purchase?
For anyone choosing to go the renting route, they will have a large spectrum of housing options available to them, increased flexibility with the relative briefness of a one-year lease, and they will not have to worry about making repairs, doing yard work, or shoveling snow, all things that become more and more difficult for older individuals. However, because rents have risen so drastically, they will tend to command a larger portion of a fixed income without the benefit of an offsetting increase in equity that comes with owning. If a rental is about 30 percent to 40 percent below the prior mortgage payment, then it may be worth considering, but seniors shouldn’t spend more than 15-25 percent of their annual retirement income on housing.
For many who wish to continue owning their homes, they are looking for homes that provide them with more freedom. So things like not having a yard or are smaller, more updated, and require less maintenance are big selling points for Baby Boomers.