Should Retiring Baby Boomers Opt for Homeownership or Renting After Selling Their Homes?

Are you a long-time resident from the baby boomer generation looking for a change in your current residence? If you're contemplating selling your home, there are numerous factors to take into account. Will you relocate to a different state or remain in the vicinity? Are you thinking about downsizing or seeking more space for your family? However, the most significant decision may come down to this: will you make your next residence a purchase or opt for renting instead?

The ultimate choice is contingent upon your existing circumstances and your future intentions. Here are two crucial considerations to aid you in determining the best course of action for your specific needs.

Expect Rents to Keep Going Up

The chart presented below utilizes Census data to illustrate the consistent upward trajectory in rental prices since 1988.

Over the extended term, rental prices have exhibited a continual upward trend. Opting for renting carries the potential for your rental payments to increase with each lease renewal, which might not be a desirable annual occurrence for you to contend with.

Acquiring a home through a fixed-rate mortgage serves to stabilize your monthly housing expenses. This enables you to secure a consistent monthly payment throughout the entirety of your mortgage term, ensuring that your payments remain steady and foreseeable in the long term. Freddie Mac succinctly summarizes this concept as follows:

". . . homeowners with fixed-rate mortgages can expect minimal to no fluctuations in their monthly housing expenses throughout the duration of their loan. This provides the reassurance that your mortgage payments will remain relatively stable in the long run, even as other life expenses may vary."

Owning Your Home Comes with Unique Benefits

According to AARP, opting to purchase your next home is a superior long-term strategy compared to renting.

"While both options have their advantages and disadvantages, buying offers a greater number of benefits, encompassing a wider spectrum of advantages."

To assist you in deciding your course of action after selling, here are some of the advantages of owning a home that the article discusses:

• Homeownership can facilitate savings for the future, as your home and the equity you accumulate as a homeowner can establish generational wealth that has the potential to be passed down to your loved ones, affording them an improved quality of life.
• You may find yourself free from making a monthly mortgage payment altogether. If you have sufficient equity to purchase your next home outright, you won't be burdened by a monthly mortgage installment. While you may still be responsible for property taxes or maintenance expenses, the absence of a monthly mortgage payment can provide significant relief.
• Aging in your current residence can become more straightforward. Owning your home affords you the flexibility to carry out renovations and enhancements that can improve daily living if your requirements evolve.

Bottom Line

If you're a baby boomer contemplating the decision of whether to purchase or rent your next residence, consult a trustworthy real estate agent for guidance. Given the rising rental costs and the multitude of advantages associated with homeownership, it might be prudent to explore the possibility of buying your next home.