Deciding between buying vs renting a home comes down to financial considerations and personal preferences, especially for older homebuyers.
By Ilyce Glink and Samuel J. Tamkin
Q: Maybe I should ask my financial advisor this question but you published an article recently about whether seniors should buy or rent property. I have a question about this.
Let’s say that all things are even between the cost of buying vs renting a home. Should someone age 60 or older, in relatively good health, and looking to downsize, rent an apartment or buy a condo?
Should seniors buy or rent
I’m single. No kids. My only sibling lives out west and appears to enjoy life out there. I’m a homeowner now. What should my next move be?
I would love to have someone else be responsible for shoveling snow and fixing anything that needed to be fixed. We are only here on this earth for a short time. If something should happen to the owner of a condo, the family would have to sell the condo. The sale may take longer than getting someone else to rent an apartment. Can you comment on the pros and cons here?
A: You’re right that there may be several ways to look at whether a person in their 60s should own or rent a home. The question you reference deals with the financial differences and benefits of homeownership. But what you’re asking about, really, are the non-financial aspects and characteristics of homeownership, of which there are plenty.
One of the most important is determining the type of home you want to live in. Do you want to live in a highrise building versus a single-family home? In this instance you may be able to choose between buying vs renting a home – even in the same building. Even if there are two different properties you’re comparing, you might find a condo and rental building with enough similar amenities and interior space to make an apples-to-apples comparison. That’s the easier decision. It’s harder when the properties aren’t comparable, or have vastly different locations or amenities.
Do you want to focus on how much you want to do as a homeowner? Maybe you never want to shovel snow and remove ice-covered sidewalks again. In this situation your maintenance obligations will be limited to the interior space of your unit. Rental buildings still require some maintenance – changing lightbulbs and taking care of other minor or routine items, but you’ll have the advantage of calling your landlord should an appliance break or if other major issues arise.
Today, most real estate markets are hot, making it difficult to find the right home to buy. If you do find a home, you may be up against 30 other bidders and have to pay over list. But it’s likely the market will cool down over the time you live in the home, making it more difficult to leave. Rentals offer the most flexibility. You can rent month-to-month, or by the year. If flexibility is the most important thing for you, then by all means you should rent, even if you pay a premium to do so.
Unfortunately, most people are not making a choice between a rental apartment and a condo building. Many people who are in their 60s (or older) may be looking to downsize, move to a single level home and to a warmer climate, or seek a place in a retirement community or 55+ community. With all of these decisions to make, deciding between renting and buying tends to come after the location and type of property have been determined.
Suffice to say that when a person sells a home and then has to make a decision whether to own or rent their next place, they will make that decision based on costs, their age and health, marital status, the location of the new home, amenities that are available, where houses of worship are located, the availability of healthcare professionals, proximity to relatives and friends, and, then, personal preferences about whether they would prefer to own or rent a place.
Type of Housing to choose when renting vs buying
Simply taking financial considerations in mind will not allow you to make a decision as to where you’ll want to live or the type of housing you’ll want to live in. All of these factors come together when people make these sorts of longer-term decisions. In some ways, the financial decision is the easiest. If you can compare one place to another and find a financial advantage to renting over owning or vice versa, you can start there and make a decision.
As we age, rentals are appealing, especially when we might not want as many responsibilities for homeownership as we once had. Again, this is a personal preference and not a financial decision (or recommendation from us). At times, everyone opts against our own financial interests to gain flexibility and convenience.
Renting is an option when you move to a new state
Here’s what we recommend: If you’ve always lived in a single family home but are considering moving to a new state, you should rent for your initial time in the area, so you can experience much of the community before you buy a place. At the end of the rental period (anywhere from 2 months to 2 years, you might decide to rent close by or buy a home in a different neighborhood entirely. If you’re moving to a location where you have family (that you like, like your sister) nearby, you’re familiar with the area, and you can afford it, then you may just want to start looking immediately for a home to buy.
And if the decision is, at the end of the day, primarily about money, then talk with your sister about her neighborhood and lifestyle to get more information about whether moving there is viable.
©2021 by Ilyce Glink and Samuel J. Tamkin