By Erica Sweeney, Realtor
Baby boomers are having a well-deserved moment in real estate right now. Many boomers—the generation born between 1946 and 1964—are reaping the benefits of a turbocharged housing market, selling their homes with a median profit of $66,000.
For the younger end of the boomer generation, i.e., those in their late 50s or early 60s, looming retirement may be a reason for selling. Indeed, the pandemic probably sped up the retirement plans of millions of baby boomers. According to Experian, the average age of retirement in 2020 was only 62.
But 60-something home sellers are also home buyers who have to compete in today’s market. If that’s you, fear not—you have a major advantage.
“Older buyers generally have more resources to rely on, either larger savings or equity from a previous home, and thus can put larger down payments,” says Danielle Hale, chief economist at Realtor.com®.
Still, many other considerations go into buying a new home besides a pile of cash.
So, if you’re in your 60s and buying a new home is on your horizon, here are the crucial things to consider.
Look to your future needs
When looking for a new home in your 60s, think about how it fits within your current career, retirement plan, and a potential early retirement, says Hale. Typically, not only do work obligations wane by the time you reach your 60s, but family obligations do as well. That offers clarity on what type of home to buy.
“How might retirement change the type of neighborhood that you want to be in, given the likely shift in commuting patterns and the way time is spent each day?” asks Hale.
Also consider that many baby boomers purchasing a new property will stay in the home for 20 years, according to the National Association of Realtors (NAR).
“Many of my clients purchasing in their 60s have very clear ideas about what they want and need in their purchase,” says Trevor Halpern, founder of Halpern Residential at North&Co. in Phoenix. “The 60s represent a time in their lives when they get to focus on themselves again. And often with that comes a more linear path to decision-making, as many moving parts, such as job and kids, are out of the picture.”
Consider a smaller home
Simplicity is a top concern for many homebuyers in their 60s, says Halpern.
“Older homebuyers should absolutely look for features that will allow them to live comfortably with an eye to the future,” he says. “For instance, if there are steps or level changes in the home, how does that feel now—and how will that feel in 10 years?”
To aid with simplicity, a smaller-sized home may work well for many 60-somethings.
“Some 60-plus buyers are breathing a sigh of relief when it’s time to leave behind the old homestead, maintenance, and expense of the older house, to move into something that’s smaller and lower-maintenance,” says Anthony Carr, associate broker at Re/Max West End in Falls Church, VA. “The smaller dwelling also provides the buyers the opportunity to focus resources on travel, volunteering (instead of yard work), as well as visiting friends and family.”
Selling your existing home
Older homebuyers are more likely to be current homeowners, and they may be selling a home at the same time as buying a new one. Baby boomers did make up the largest share of home sellers last year, at 43%, according to NAR.
“Thus, they’ll want to consider the market for sellers, as well as from the perspective of buyers,” says Hale.
For instance, if you own your current home outright, or if it has grown in value, you could owe capital gains tax when you sell. However, you don’t have to pay tax on the first $250,000 of the gain if you’re single, and $500,000 if you’re married.
“Keep in mind that your income-tax bracket may limit how much you can claim for tax exemptions on this gain, and you may have an extra tax on top of the gain, depending on income,” says Carr.
Think about timing
The real estate market is hot, with sellers landing their asking price 99% of the time. Higher prices also come with an accelerated sales timeline, with properties averaging only three weeks on the market.
So before you sell, you may want to find another house and get it under contract if you can afford it. You don’t want to list your existing property and have nowhere to go when it sells.
Have fun in your new home quest
By the time they reach their 60s, most people have fewer obligations and are in a stronger financial situation. The median net worth of Americans in their 60s was $266,400 in 2019, according to the Federal Reserve.
That gives 60-something buyers freedom when looking for a new home, says Halpern.
“Honestly, it may be your last house,” adds Carr.
So have fun in the process!
“Having the opportunity to choose where to live is a wonderful and well-earned privilege,” adds Carr. “And allowing the decision to overwhelm you or complicate your life takes the joy out of it. So when feeling overwhelmed, sit back, breathe, and know that you’ve gotten this far in life by making solid decisions.”