Should Baby Boomers Buy or Rent After Selling Their Houses?
Are you a baby boomer who has been in your current home for a long time and is ready to make a change? There are numerous factors to consider while selling your home. Will you relocate to another state or remain in your current state? Is it time to downsize, or do you need additional space for your family? But maybe the most important consideration is whether you will buy or rent your next house.
That decision is ultimately determined by your existing circumstances and future objectives. Here are two critical points to consider while deciding what is best for you.
Rents are expected to rise more.
The graph below uses Census data to show how rents have consistently risen since 1988:
Long-term rent increases have been steady. If you choose to rent, your rental payment may increase each time you renew your lease. A greater rental expense may not be something you want to deal with on a yearly basis.
A fixed-rate mortgage helps to stabilize your monthly housing payment when you purchase a property. This allows you to fix your monthly payment for the life of your mortgage. This keeps your payments consistent and predictable throughout time. Freddie Mac puts it succinctly:
“. . . homeowners with fixed-rate loans will see little to no change to their monthly housing cost over the life of their loan. You can be confident in knowing that your mortgage payments won’t change much in the long term, even when life’s other costs do.”
Owning a home provides numerous advantages.
Buying your next house is a better long-term investment than renting, according to AARP:
“Though each option has pros and cons, buying provides more pros, with a broader range of benefits.”
Here are just a handful of the perks of homeownership that article discusses to assist you decide what you'll do once you sell:
- Owning a property can assist you in saving money for the future. Your property, as well as the equity you build as a homeowner, can provide generational wealth that can be passed down to loved ones, providing them with a better life.
- You might not even have to make a monthly mortgage payment. You wouldn't have a monthly mortgage payment if you had enough equity to buy your next property outright. While you may still be required to pay property taxes or maintenance fees, not having to worry about a monthly mortgage payment may be a huge relief.
- It is possible to age in place. If your needs change, owning a house allows you to make modifications and updates that will make your life easier.
Let's talk if you're a baby boomer debating whether to buy or rent your next house. With rents rising and homeownership offering so many advantages, it may make sense to consider purchasing your next home.