Homes in popular retirement havens are heavily discounted right now, motivating some baby boomers to start buying now ahead of retirement, a new article from Money magazine suggests.
For example, prices for condos in Napa, Calif., and Naples, Fla., have dropped about 44 percent since the housing boom, according to Fiserv data. That mixed with historically low mortgage rates are prompting some to start picking their retirement haven.
According to the 2011 National Association of REALTORS® Investment and Vacation Home Buyers Survey, the average age of vacation-home buyers is 49, and 34 percent said they planned to use the home as a primary residence in the future, suggesting it may become their ultimate retirement destination.
Financial experts recommend that retirees who are considering buying a second home prior to retirement may want to consider renting it out until they’re ready to move in to offset the cost of ownership. However, if they don’t want to step into the landlord role themselves, they should expect to spend 10 percent to 15 percent of the monthly rental fee on a property manager. Also, if they’re looking at purchasing a condo, they should make sure the development allows rentals since some developments do not or have restrictions on rentals.
“Buying your retirement home free and clear may make sense as long as you’ll have enough savings left over to cover a year’s worth of living expenses,” the article at Money notes.
Source: “Retiree Havens Go on Sale,” Money (November 2011) and “Buy Now, Retire Later,” Forbes Magazine (June 27, 2011)