Should Baby Boomers Purchase or Lease After Selling Their Homes?
Are you a baby boomer considering a change in your living situation? After years in your current home, contemplating a move can be both exciting and daunting. Should you relocate to another state or stay in your current locale? Maybe it's time to downsize or, perhaps, upgrade to accommodate visiting family members? A pivotal question often arises – should you invest in a new home or opt for a rental?
Your choice is influenced by your present circumstances and long-term aspirations. Here are a couple of significant points to guide your decision:
The Rising Trend of Renting Expenses
The chart below, based on Census data, illustrates the steady increase in rents since 1988. Historically, rents have seen consistent growth. If you opt to rent, it's likely you'll face rent hikes at every lease renewal. A constantly increasing rental expense might not be the financial fluctuation you want during your golden years.
On the other hand, a fixed-rate mortgage offers stability. By purchasing a home, you can ensure that your monthly payments remain consistent throughout the loan period. As Freddie Mac points out, homeowners with fixed-rate loans enjoy a predictable financial future, irrespective of other economic variables.
The Added Perks of Homeownership
A study by AARP suggests that, in the long run, buying often outweighs renting in benefits. Some advantages of homeownership include:
Building a Legacy: Homeownership allows you to accumulate equity which can serve as a source of generational wealth. By passing it on, you can help secure a better future for your descendants.
Potential Absence of Mortgage: With sufficient equity from selling your previous home, you might be in a position to buy your next one without needing a mortgage. Even though property taxes and maintenance are inevitable, eliminating a monthly mortgage payment can offer significant peace of mind.
Flexibility for Aging Needs: Owning your home provides the autonomy to modify your living space. As needs evolve, you can renovate to ensure comfort and accessibility.
For baby boomers deliberating between buying or renting their next home, it's worth discussing your options. Given the escalating rental market and the myriad advantages of homeownership, purchasing might be a prudent choice for your next chapter.