In this week’s episode of my podcast, I’m talking about housing matters. Because where we end up living in retirement is a big issue that many pre-retirees begin to think about.
I know it’s been on the top of mind for me the last couple of years as I faced becoming an empty nester in 2021 and with the lease on my current rental coming to an end in 2022. Both of these circumstances gave me a chance to consider where to call home.
It actually ended up being more thought provoking, soul searching, and stressful than I imagined. There were so many considerations that ended up influencing my decision. Even though I’m closing on a new home in a week, I don’t know if this home will be my “retirement” home. I have dreams of living on a lake in New Hampshire someday, so this might be a short stopover before that point. I’m keeping my mind and my options open at this point and am looking forward to living in a new town and a new neighborhood. Change can be good.
While I’ve been in the midst of this home-buying process, I was interviewed for an article that appeared this week on the Bankrate.com website written by a gentleman named Jeff Ostrowski. The focus of the article is on the trend of women emerging in force on the home-buying front, despite affordability challenges.
As Jeff points out in the article, many women are unknowingly joining a trend: single women are a growing force in the housing market.
The National Association of Realtors says single women made up 19 percent of all homebuyers in 2021, a share that has been trending up since it hit a low point of 15 percent in 2014. Single men make up just 9 percent of buyers, while couples, both married and unmarried, do nearly 70 percent of deals.
A separate survey by Bank of America found a similar house-before-spouse trend: 65 percent of single female prospective homebuyers said they’d rather not wait for marriage to buy a home, and 30 percent of women who already own homes bought when they were single.
Many young women are leaving their parents’ home to venture into their own homeownership because they consider renting a waste of money.
Many single women are deciding not to find partners before becoming homeowners. Because people are delaying getting married until an older age, women aren’t waiting for homeownership as part of the traditional coupled-up decision to buy a home.
So what’s driving the trend?
Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors, told Bankrate that for single women homebuyers, financial stability is an important part of the decision.
“Women have a very strong preference for homeownership,” Lautz says. “They think it’s a good financial investment. They also are willing to make financial sacrifices. They traditionally have a lower household income, and they’re willing to cut expenses in other areas of their life to achieve homeownership.”
“In something of a paradox, single women make less money on average than single men but are more eager to buy homes,” Lautz says. That could reflect the certainty and stability that go along with a monthly mortgage payment, as opposed to renting in an era when monthly rents have been rising sharply.
“Knowing exactly what your payment is going to be for the next 30 years, especially if you’re a single mom, could be incredibly important for women,” Lautz says.
Renters can also face the possibility that the landlord could not just raise the rent but decide not to renew their lease. While I wasn’t surprised by my landlord’s decision to renew my lease this coming April, it did spur me to look at home buying vs. renting again. For me, it was about stability and not being at the whim of a landlord who could choose to end my lease. At 56, I kind of want to be settled. By the time I move into the house I’m purchasing next week, I will have moved 6 times in the last 6 or 7 years. I know that I’ll have much more peace of mind owning my home versus renting. The financial side of the equation is another story. Some of the benefits of homeownership are writing off the interest on the loan.
I was careful to find a house that is completely re-done, low maintenance, in a great location, and appealing to future buyers. Although, I don’t really have any plans to move… at least not until I get moved in first. My realtor says it’s a great house to “age in place,” a single level ranch, not a huge yard, etc.
There are significant challenges facing single buyers, however. The process, especially for self-employed people like me, has been extra challenging. But I think I’m in the home stretch with a closing scheduled 7 days from now. I guess I should get some packing done.
As we’ve all witnessed and as the Bankrate article states, “Home values soared to record highs during the pandemic, and that price jump makes buying homes difficult for those doing the deal on just one paycheck.”
The competitive bidding market has also been really challenging. I was outbid on three occasions, and I’ve heard of people making 10-20 bids and being outbid. As one person interviewed in the Bankrate article said, “I would put in a high offer, and someone would swoop in and pay all cash.”
On the upside, purchasing a home in this market has been attractive because of interest rates, but because of Covid, many people were able to stash away a lot of cash that they used to lure sellers into accepting their offers.
The Bankrate article offers some suggestions for singles in their home-buying efforts:
- Take a realistic look at your finances. If you’re drowning in credit card debt or facing other financial challenges, address those issues first. “Making sure that you’re financially ready to buy a home is the most important place for any buyer to start, but this could be even more important for single buyers with one income,” says Robert Heck, vice president of mortgage at Morty, a mortgage marketplace.
- Raise your credit score. Your credit score is the most important factor in determining the mortgage rate you’ll pay, so pay all bills promptly and don’t run up large balances on your credit cards.
- Research first-time buyer programs. Toomey is tapping into Massachusetts’ grant program for first-time buyers. Most states and some cities offer down payment assistance for first-time buyers.
- Be prepared to do battle. While the U.S. housing supply has eased a bit in recent months, this remains very much a seller’s market, one characterized by tight inventories and aggressive competition among buyers. Full price offers remain common.
- Shop around for a mortgage. Once you’ve found a place, make sure to research your mortgage options. Shopping around for a home loan can save you thousands of dollars over the life of your mortgage.
- Consider a low-down payment mortgage. For single women who can’t come up with 20 percent down, there are plenty of mortgages that offer down payments as low as 3%, Bank of America’s Cummings says.
- Don’t forget maintenance costs. One downside of homeownership is shouldering the responsibility for repairs. Pipes leak, appliances break, and roofs wear out.
On another front, many single and coupled up women, and their spouses and partners, are open to moving across the country or the world. But how does one choose where to live?
Today, I found out about a pretty neat tool that helps you pick a place to live. It’s kind of a fun little creation by the New York Times. I tried it and based on how I answered the questions, towns in Arkansas, California and Florida were suggested to me. I was kind of hoping for Asheville, NC and was really surprised that my new town didn’t come up. Just kidding. By checking a warmer climate on the list, kind of eliminated any towns in the Northeast. Truth be told, I don’t mind winter as I enjoy snowshoeing, skiing, skating and cross-country skiing. But, around March I’m ready for warm weather.
Back to the tool….it uses 35 different factors that help predict which American cities best match users’ preferences. Some of the factors are, for example:
- A region’s average cost of living (West, Midwest, South, or Northeast)
- climate
- racial diversity
- political affiliation
- population density, to name a few
The New York Times said “We created a quiz using data for almost 17,000 places across more than 30 metrics… And we’ve quantified health care quality, snowfall and crime rates – criteria that might be top of mind for retirees. Realtor.com shared housing prices with us; Yelp contributed tallies of restaurants, music venues and gay bars; and AccuWeather helped us collect statistics on temperature, sunshine and snowfall, to name just a few of our sources.
The tool even allows people to focus on the qualities that matter most to them by double voting for those qualities. Once search results are narrowed to a user’s satisfaction, they can then drill down further to get details for individual cities and their demographics. Then, users indicate their favorites by liking them with a heart. Once they’re done, they click “Compare and Heart” to view a table that compares the various cities.
I’ll provide a link to the tool in the notes of this episode, but be warned, you need to be a subscriber to the New York Times to use the tool, but it’s pretty inexpensive subscription. In addition, you can check out: bestplaces.net and www.MapTitan.com
There are several other sites that help you find best places to live:
- Niche is a great way to find ratings and reviews for towns, school districts, colleges, and neighborhoods
- Livability
- AreaVibes
- Teleport
- BestPlaces
- HomeSnacks
CNBC just put out its 2022 listing of top 10 states to retire to. The criteria used: was affordability, quality of life and access to quality healthcare.
The top 10 states are…
- Florida
- Virginia
- Colorado
- Deleware
- Minnesota
- North Dakota
- Montana
- Utah
- Arizona and NH in a tie
NH is on my list of states to eventually retire to. The affordability rank is 34, but quality of life is number 2 and healthcare is 8.
The worst states to retire in are Mississippi, NY and NJ.
To wrap things up, I just want to hit on a few thoughts on the Upside of Downsizing. Mainly because when we retirees decide to move from or sell our family homes, it will typically involve downsizing not only our physical space, but also our stuff. And getting rid of that “stuff” can sometimes be hard. I know because I’ve been downsizing for the last 6 years even though I have no plans to retire anytime soon. It seems every time I move, I get rid of more stuff, only to collect some again.
It’s hard to part ways with stuff you’ve been living with for a long time, but the process can be pretty cathartic. I just got rid of a lot of sheets, pillowcases, towels, pie plates and mismatched socks, and I had a new skip in my step the next day. Seriously, there are many, many upsides to downsizing and chief among them is lower housing costs if you’re going to a much smaller home. And because this podcast focuses on financial wellness, anything we can do to be more efficient with our money is a win in my book. Even if you don’t have plans to move in the near future, decluttering, simplifying and getting rid of stuff is good for everyone. And the guys that rent dumpsters love it too.
There’s a pretty interesting website I just came across called upsideofdownsizing.com. Their “about us” page says “helps those 50-plus gain freedom by downsizing, leading to a happier and healthier life balance. Through educational events and professional consulting, we provide ideas and insight on downsizing topics, including eight steps to successful downsizing, tackling the emotional challenges of downsizing, selecting the right home, and more. In addition, we can stage your home for a quick and profitable sale. Our educational events and services are designed to enrich those 50-plus and their families by promoting healthy, safe, and meaningful lifestyles.” While I cannot vouch for their services, this sounds like a great service to check out.
To close out this week’s episode on housing, I do believe that home is where the heart is. If you focus on this, you’ll be okay. I will be practicing what I preach as I move out of my lakefront rental that I’ve loved living in the last 4 years. But I know home ownership will be better for me in my little retirement ready ranch home. And the silver lining is that I’ll be next to a different lake with a mountain in the backyard. There is an upside to downsizing.
Thanks for listening and don’t forget, knowing more is having more and you too can get her done.