Should I buy a new home when I retire, or should I just rent?
It’s a question I get a lot here, and one with a complicated answer.
I almost always recommend people rent for the first few years, especially if they’re moving to an area they’ve never lived or spent a lot of time in before.
Then, once they determine that yes, this is the place for them, I recommend they buy.
Popular residential real estate portal Trulia.com releases a bi-annual rent vs. buy report, and in their latest report they focused on the question “Should Retirees Rent or Buy?”.
To try and answer that question, Trulia looked at median home values and median rent in 100 U.S. cities with the largest share of residents aged 65 and over.
In doing their calculations they assumed that buyers would have a 30-year fixed rate mortgage with a 20% down payment, would be in the 15% tax bracket, and would stay in the home for fifteen years.
It is interesting to note that the top 10 “retirement” cities where buying held the biggest advantage over renting were all in Florida.
The Villages was the retirement city where buying held the biggest advantage over renting, with Trulia determining that it is 71% cheaper to buy in The Villages than it is to rent.
I have some issues with the numbers they used for rent, but in general I agree with their ultimate conclusion that it is cheaper to buy than rent.
Here’s the Top 10 list:
So, if you are considering Florida for retirement and planned on renting throughout most if not all of your retirement, you might want to rethink your strategy.
It could cost you a heckuva lot more to rent over the years than it would ultimately cost you to bite the bullet and buy a home.
To read Trulia full Rent vs. Buy Report, click here.