As people grow older, they may no longer need their large houses as their children have grown up and moved out. This scenario leaves the baby boomers to two options. They can either buy a smaller home for their needs, or they could rent a home.
Why Baby Boomers Are Renting a Home?
While people are normally buying homes, baby boomers have instead taken the rental route during the past few years. In a recent analysis performed by Freddie Mac, it is expected that 5 million baby boomers will rent their home by 2020, according to CNBC.
There are a variety of reasons that baby boomers wish to rent a home. For some people, they want to be more mobile. As they enter their golden years, they are traveling more across the country and visiting distant destinations. They are looking for short-term leases in fully furnished homes as they can stay and enjoy everything that the city and neighborhood has to offer before moving on to the next city location.
Other baby boomers are renting because it is more convenient. They don’t have to worry about performing maintenance or upkeep to the house. Instead, the landlord will take care of major repairs and daily chores that will keep the property in good condition.
Rising Rental Prices Are a Reason to Consider Buying
However, there is a considerable downside with renting a home as a baby boomer. The major issue is rising rental prices. Unlike a house that has locked in mortgage costs until the house is paid off, rental rates continually increase every year. Since a baby boomer has entered their retirement years and are living on a fixed income, this rental rate increase can begin to significantly lower the amount of retirement funds they have available.
No matter where a baby boomer rents, the rate will increase until they move out. The rent never moves in the opposite direction. It can only take one medical issue or emergency to wipe out a savings. Then the baby boomer can be left in the position where they are struggling to make rental payments and to pay for unexpected expenses. This isn’t such an issue if the person owns a home as, once they pay off the mortgage, they don’t have a large monthly amount moving out of their bank accounts.
In addition, a baby boomer has to watch out where they rent. They can have a bad experience when moving into a home that has maintenance problems where the owner doesn’t want to make any repairs. The baby boomer can become stuck in the rental house for the duration of the lease or face losing their deposit and paying penalties for breaking their lease agreement early.
While renting a home can provide a baby boomer with a more convenient and mobile lifestyle, owning a home may offer a more stable solution for many people. Baby boomers need to consider both options based on their income, where they wish to live, and the lifestyle that they want to have. Then they can make the best decision that fits into their present and future needs.