The new wave of American retirees is challenging traditional thinking about housing in retirement. The stereotype of the old folks serenely sitting on the porch of the house they’ve owed for forty years has given way to a new kind of retiree – restless, peripatetic and often inclined to abandon the old homestead for a new one – perhaps outside the country. And in doing so they’re joining a growing pool of short-term renters who opt to try out a community before making the commitment to buy a home there.
More and more Americans are committing to live abroad, especially in retirement. Countries such as Ecuador, Costa Rica and Belize are home to rapidly growing communities of retired expatriates enjoying more bang for their retirement bucks and relief from conditions at home. It may be tempting to fall in love with a location on a visit and leap right in to buy a home there, usually at prices far lower than in the US. But it may be wiser to rent first and get a taste of what it’s like to be a resident – not just a tourist – before committing to a home purchase.
Apartments in many of the favorite expat countries may be inexpensive and more secure. Renting a house lets a resident try out local services like electricity and trash pickup, and what to do in case of an emergency repair. Renting also buys time to learn about local homeowner issues such as mortgages and property taxes, before committing to a purchase.
The same points apply back home in the US, where retirees are downsizing and taking a look at that house in the country or the small beachfront village that they’ve always dreamed of. But here too, renting lets a prospective homeowner test drive the community and see whether it’s a good fit, while under less pressure to house-hunt. And just as expatriates abroad may end up opting not to buy property, these renters, too, may choose not to take the plunge into buying a home in a new area after they’ve lived there for awhile.
But whether at home or abroad, all real estate, as Jason Hartman puts it, is local. In other words, it exists in its context of community, locale and country, and prospective buyers become subject to local conditions and requirements wherever they choose to buy a property. Whether a house is down the street, in the next state, or halfway around the globe, it’s still local to the place where it stands.
The reasons for choosing renting over buying in markets both local and global are many. But they add up to an expanding pool of prospective tenants, both long and short term, for smart investors able to recognize those reasons and give these new renters what they’re looking for. (Top image: Flickr/SadieP)
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