Why Retirees Are Expected to Sell Their Homes in These Cities
Robert and Margaret Smith had spent 35 years in their cozy four-bedroom house nestled in the quiet suburb of their small town. The house had seen them through the birth of their three kids, the struggles and triumphs of their careers, and countless memories shared with their loved ones.
However, as they approached their golden years, they began to feel that the house had become too big for just the two of them. The maintenance and upkeep had become burdensome, and they longed for a simpler life.
After much contemplation and research, the Smiths discovered a delightful retirement community that offered everything the couple desired—an inviting environment, a range of amenities, and a vibrant social life.
This discovery filled their hearts with excitement, and they decided to sell their beloved family home and embark this new chapter in their lives.
Robert and Margaret settled into their new home in the retirement community, which exceeded all their hopes and expectations. They enjoyed the new friendships they made, the activities offered, and the carefree lifestyle without the hassles of maintenance. They felt content and joy in their new space, surrounded by like-minded individuals who were also looking to simplify their lives.
How Retirees Are Using Their Homes to Fund Retirement
According to a new Vanguard report entitled “Home is where retirement funding is,” about 80 percent of Americans over the age of 60 are homeowners.
Similar to the Smiths, 25 percent of American retirees sell their homes and relocate to somewhere warmer and more affordable areas. This decision allows them to free up home equity, which can be equal to or even more than funds held in their retirement plans, such as the 401(k).
By moving houses, the average American over 60 can unlock approximately $100k of home equity, and this amount can be even higher if they decide to downsize. This is a significant amount, considering that the median American retiree has about $223k in their financial retirement accounts.
Rafe Klein, Senior Vice President of Investments at David Lerner Associates, provides an example: “Let’s say a homeowner sells her house in Prescott Valley-Prescott, Arizona for $440k and moves to a similarly-sized house in Homosassa Springs, Florida costing $310k. In this scenario, she would be cashing out an amount of $130k, which is 42 percent of the new home’s value.”
Other Reasons Retirees Sell Their Current Home after Retiring
Maintenance costs: With no steady income, many retirees find it difficult to afford the monthly expenses associated with their homes, which leads them to selling and relocating.
Lifestyle changes: As you grow older, you might prefer a home that requires less maintenance, or you might develop mobility issues that would require you to move to a single-story residence.
New interests: You might find yourself wanting to move to pursue interests, such as skiing or golf. In such cases, they may choose to move to a location that offers better access to these activities or seek neighborhoods that are more pedestrian-friendly or closer to the beach.
Rising home prices: Increasing home prices can indeed be a tempting opportunity for retirees looking to sell. Below, we will explore some of the hottest housing markets for retirees.
Retirees Are Setting the Tone for Housing Market
The oldest Americans, including Baby boomers and retirees, are not always considered trendsetters, but they are at the forefront of home selling.
Each year, TKI releases its nSKOPE Predictive Analytics Report, which lists the cities expected to be the largest markets for retirees selling their homes.
Here are the findings from the latest TKI’S Quarterly nSKOPE Predictive Analytics Report:
|City||Percentage of Properties Predicted to List (%)||Median Sale Price in December 2022 ($)|
Tips to Sell a House in Retirement:
- Prepare Your Home:
Take the time to declutter and thoroughly clean your house.
Remove any excess furniture and personal items to create a spacious and inviting atmosphere.
Consider staging your home or hiring a professional to showcase its potential.
- Make Necessary Upgrades and Repairs:
If you’ve lived in your home for many years, there are likely structural, mechanical, or cosmetic upgrades or repairs to address.
Address any major repairs, such as broken fixtures or leaky faucets. Consider strategic upgrades that can add value to your home, such as renovating the bathrooms or kitchen.
However, be mindful of your budget and focus on improvements that will have the most impact.
- Set the Right Price:
Many retirees, once they decide to move, often make the mistake of underpricing their property in an attempt to secure a quick sale.
Research the local real estate market to determine a competitive and realistic asking price for your home.
Consult with a real estate agent to get a professional opinion and to ensure you are not underpricing or overpricing your property.
- Enhance Curb Appeal:
First impressions matter, so invest in enhancing the curb appeal of your home.
Plant flowers, trim bushes and trees, maintain the lawn, and ensure the exterior of your house is well-maintained.
Consider repainting the front door and refreshing the exterior if necessary.
- Market Your Home Effectively:
Generally, the best time of year to list your home is on a Saturday in the first half of May. Homes listed during this window tend to sell two weeks faster than average and for $1,600 more.
Utilize both digital and traditional marketing channels to reach potential buyers.
Take high-quality photos and create an appealing listing description. Leverage online platforms, social media, and real estate websites to showcase your property’s unique features.
- Be Flexible with Showings:
Accommodate potential buyers by being flexible with showing times.
Keep your home spotless, and be ready to step out during showings to allow buyers to explore the space comfortably.
- Consider Capital Gains Taxes:
If you have owned your home for a considerable amount of time and gained significant equity, you may be liable to pay capital gains taxes when you sell.
The current tax law allows for an exemption of $250k in profits for a single person and $500k if married.
- Work with a Registered Real Estate Agent:
The challenges faced by retirees when selling their homes differ greatly from those of younger people.
Consider hiring a real estate agent who specializes in the retirement market.
They can provide valuable insights, handle negotiations, and guide you through the selling process, ensuring a smooth transaction.
- Be Patient and Open to Negotiation:
Selling a house can take time, so be patient and prepared for potential negotiations.
Be open to reasonable offers and work closely with your real estate agent to determine the best course of action.
- Plan Your Next Move:
While selling your home is a significant step, it is essential to plan your next move.
Conduct thorough research and explore retirement communities or other housing options that align with your needs and preferences, ensuring a seamless transition once the sale is complete.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.