The last several years have wrecked havoc on many people’s plans for retirement. They have seen their nest egg dwindle and in some cases disappear. Many have pushed back the date they will stop working and some have stopped even thinking about what part of the country to which they plan to relocate. For some however, this may be the time to again begin putting their retirement plan together.
There is a tremendous opportunity right now to buy a home at a sensational price in certain traditional retirement destinations. Couple that with the fact that in other parts of the country the housing market is still experiencing falling prices and we may be looking at a perfect window of opportunity to buy your retirement home.
Example: If you currently live in New Jersey, you are probably well aware of two things:
- there was a lot of snow there this past winter and
- the local housing market is struggling
Point number one might have you dreaming of spending your retirement years in a place like Las Vegas or Tucson or San Diego. However, point number two might have you believing this is not the time to even consider the move: If I can’t get top value for my house, why sell now? Actually, this may be a very opportune time.
What caused prices to tumble throughout the country was the emergence of distressed properties (foreclosures and short sales). These discounted properties put tremendous downward pressure on the values of the other homes in the region. The states that are clearing this inventory rapidly are the states where prices will recover more quickly. The states that were first hit with the housing crisis (Arizona, Nevada, California and Florida) are now the first to show signs of a recovery because they are selling off their distressed properties at a faster pace than many other parts of the country. New Jersey, on the other hand (along with much of the Northeast), is seeing their inventory of distressed properties growing. That is why prices are continuing to soften.
What does this have to do with my retirement plans?
If you own a home where prices are falling and plan to buy a retirement home in one of the areas that are beginning to recover, you are sitting on an asset that is losing value and waiting to purchase an asset that is about to increase in value. That doesn’t make sense financially. Even if you are not 100% ready to move right now, it might make sense to sell the 4 bedroom colonial you currently own in New Jersey (or in NY, MA or WA) and buy a smaller home or condo in town. With the additional money from the sale, you could probably buy a beautiful retirement home in the area you always dreamed about relocating to. Even if you needed some extra financing to buy the perfect home, you are borrowing while mortgage money is very inexpensive.
How do I know if this applies to me?
As mentioned above, the primary factor determining where prices are headed is the number of distressed properties in the area. Look at the map below from NAR. It shows the amount of distressed properties about to come to market in each state in the country. If the state you currently live in is red, yellow or orange and the state to which you plan to retire is a shade of green, you should at least consider the move.
There are definitely challenges for many in the current housing market. At the same time, opportunities exist for others. Sit with a real estate professional who can give you the right data to help determine whether such an opportunity currently exists for you.