By Chad Taylor
Recently I have had the pleasure of meeting with several potential home sellers who are exploring the option of selling now while the market is hot and just renting moving forward. One consistent theme for them has been to “simplify life.” In most cases, they are tired of the everyday maintenance that goes into keeping a home in good shape and would rather let someone else take care of it for a while. Or as their kids are moving out of the home and they find themselves with more time on their hands, they would like to be in a position to take off on a trip at a moment’s notice without worrying about mowing the yard or servicing the A/C.
As a Realtor, it is very hard for me to condone renting versus owning. However, as I have researched the topic more and more, there are some benefits to renting as you reach retirement age. Here are some things to consider:
- One of the biggest benefits to owning versus renting is equity. This is probably the most important determining factor when weighing your options of renting or owning. As you go through life as a homeowner, one of the benefits of owning a home is building equity. In most cases, this is how someone achieves the opportunity to “buy up” and purchase a larger or newer home. However, if you will not be moving again to get a bigger and better home, then your equity growth may become less valuable to you. In fact, it is typically more important to a person entering retirement to live a comfortable life than it is to be sitting on a nest egg of equity. Unless you are planning to leave your home as part of your estate when you die, the best option for you may be to sell high and rent.
- Footloose and fancy free. Of the three families that I have consulted with recently, two of them are selling to be closer to their kids and one of them is selling because their kids are going off to college and they would like to have the option to travel more. In all cases, the sellers also don’t really need all of the space they have now. It is just more space they have to keep clean in their eyes. Renting will provide these families the option to try out more than one area without worrying about selling a home. And in the case of being closer to kids, it also provides you with a little insurance in the event that your kids decide to move or have to move because of work.
- Don’t try to time the market. Many times before I have said that you won’t know that you have waited too long until it is too late and the market has already shifted. If you are considering a move now due to the recent hot seller’s market, don’t wait. Sustainable home appreciation should range from 4-6 percent annually. Kansas City has been over 6 percent for the last five years in a row, and much more than that in some areas of town. Therefore, it is inevitable that the market will shift again as the buyers out there refuse to pay inflated home prices. Without a crystal ball it is hard to say exactly when this shift will happen. But I can say with confidence that it is coming. I mastermind with several agents all over the country and the markets on the coasts are already seeing a shift. If your equity can provide you with a lifestyle that you deserve during your golden years, don’t wait to cash out.