Home Buying, Boomer-Style

As people retire and take their benefits later, buying a home later in life is becoming more common. Before making the investment, there are some considerations that baby boomers, in particular, should take into account.




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Your ‘Real Estate Footprint’

Marc Hernandez, a global real estate advisor with Douglas Elliman of Beverly Hills, said he’s seeing clients in their 30s and 40s looking for larger properties, while buyers in their 50s and 60s are looking to “reduce their real estate footprint.”

“At this stage of life, the size of the family and the size of the home are incongruent,” Hernandez says. “Generally speaking, the kids are out of the house, income potential has already peaked, and larger living spaces are no longer required.” There are plenty of potential pitfalls to downsizing, however. Carefully consider how much square footage you’re comfortable giving up.




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Your Living Arrangement

Although millennials have overtaken baby boomers as the most populous generation, baby boomers (born 1946 to 1964) are at the age where their lifestyles and living arrangements are starting to shift. “Think of it: By 2030, all baby boomers will be older than 65,” Hernandez says. “As the generation approaches that period, we are seeing a shift in the types of properties it desires. … It’s kind of like being on the right side of the proverbial bell curve: The types of properties that buyers wanted in the beginning of this cycle are not that different from what you’re seeing on the tail end of it.” This includes alternative living arrangements like moving back in with family, moving to a college campus, or even having roommates.




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Indoor vs. Outdoor Space

Another factor for older home buyers is the ratio of interior space to exterior space. “The younger buyers are fine with the large home on a smaller lot,” Hernandez says. “However, some of the older buyers are looking to reduce the living space, such as moving into a townhome that provides them with a bit of garden space so they can be outdoors, garden, and enjoy the sunshine.”




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Condos vs. Larger Homes

Although some people enjoy gardening and other outdoor activities in retirement, others are likely fed up with landscaping and other chores of home ownership. They may welcome the transition to a place with “less yard space, less maintenance, and more amenities that are taken care of for them,” Hernandez says. “Condominiums and townhomes fit that bill pretty well.”




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Walkability

Having restaurants, retail, and other everyday destinations nearby is a major factor in choosing a home. “Walkability is important to this age group,” Hernandez says. “With more time on their hands as they approach retirement, having the ability to stroll to shops, restaurants, and entertainment is a luxury.” There may also come a time when it’s not safe to get behind the wheel of a car, and you don’t want to have to rely on someone else to drive you for every errand.

Related: 18 Cities Where You Can Live Car-Free




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One-Story Homes

For home buyers anticipating mobility issues as they get older, one of the most important criteria is a one-story home. “Older buyers are looking for properties where the living space and amenities are on one level,” Hernandez says. “People are taking steps to avoid … steps.” This is a big consideration if you hope to stay in your own home as you age.




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The Passive Income Effect

Many seniors rely on passive income, such as rental income or earnings from business activities in which they’re not actively involved. “When applying for a loan, many lenders require a larger down payment if funds are coming from passive income,” says Bibbi Herrmann-Conner, a luxury real estate professional with the Harwood Group in Rancho Santa Fe, California. “So you might need to put down 35% rather than the traditional 20%.”

Related: 24 Passive Income Ideas to Increase Your Retirement Savings




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How Much Mortgage You Can Afford

Regardless how big a mortgage you qualify for, a good rule of thumb is to make sure that your monthly payment is no more than 25% of your monthly budget. You don’t want to be in a position where you’re “house poor” — meaning you own a home but don’t have much extra money to spend because most of your income is going toward your mortgage — especially in retirement.

Related: Refinancing Your Home: Should You or Shouldn’t You?




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Location, Location, Location

If you’re an older buyer purchasing a home to use as an income property, to leave to your children, or even to use as a vacation home and rent out part-time, it’s important to think of the location. “It doesn’t have to be swanky, but rather a place where people will want to come in for the summer and can bring their children and pets,” Herrmann-Conner says.




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Children Moving — or Staying — Home

Stagnant wages combined with high housing costs and student debt are forcing some millennials to move back in with mom and dad. According to a recent Zillow report, more than 14 million millennials live with their parents. Many have moved out and “boomeranged” back amid financial or personal stress, or after having children of their own. Because of this, baby boomers may find themselves needing to purchase a new home — or stay in their current one — to accommodate the new household dynamic.

Related: Moving in With Your Adult Kids? Here’s How to Make It Work




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Best Places to Retire

Where should you move in retirement? A lot depends on what you’re looking for. Retirees who want to lower their tax burden may want to consider Florida, Mississippi, South Dakota, Wyoming, or Alaska. All across America, there are affordable places to retire that you might be overlooking. In Arkansas, for example, the cost of living is 7.5% below the national average, and the city of Hot Springs attracts retirees with 46 hot springs, 11 championship golf courses, and an average home price under $120,000.




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Health Care Access

According to a 2019 WalletHub ranking, the top five locations for senior health care are Minnesota, Hawaii, Massachusetts, Colorado, and South Dakota. This becomes an even bigger consideration at the local level. How far away would you be from a hospital or urgent care facility?




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A Good Investment at Any Age

Real estate can be a great investment no matter what your age, says Hernandez, the Beverly Hills real estate agent. “It’s an asset class that traditionally beats the stock market and provides tax benefits as well. I think more important than the age of acquisition is the location, condition, and price of the property.”




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