Retirement is a new and liberating era of life that often comes with a change of lifestyle. Without work, our priorities shift, and we can end up with a lot more time on our hands to do what we enjoy. For many, this calls for a change of scenery.
Some retirees move to neighbourhoods in search of a strong community, where they can form new friendships. Others may be looking for opportunities to pursue their interests, such as hiking in the country, birdwatching, or badminton on the beach. Many of us would simply like to wake up somewhere warm with a window view of the sea.
These lifestyle changes all have their merit, for sure—but there is even more to gain. You can also unlock a substantial amount of home equity by relocating, meaning more money to spend on enjoying your retirement.
Accessing home equity through relocation
According to data from the American Community Survey and Vanguard research, around 60% of inter-county and interstate movers aged 60+ relocate into a cheaper housing market. By selling up and purchasing a home where prices are more affordable, movers typically unlock $100,000 in home equity—or more than 40% of the new residence’s value.
An extra $100,000 can go a long way, particularly for the median 60+ U.S. homeowner, who has an annual income of $59,050, financial assets of $87,000, and net worth of $349,600.
Those in the 90th percentile access even more equity—an impressive $347,000—by relocating to a cheaper market.
And that’s not all. Cheaper markets often come hand-in-hand with a more affordable cost of living. As well as the opportunity to extract home equity, you will also be able to enjoy the same standard of living for less money, meaning your savings will stretch further in your new location.
Therefore, the “retire-and-relocate” strategy can be a game changer for those looking to get the most out of their golden years and live a high-quality lifestyle.
Who is reaping the gains?
So, is it just retirees unlocking home equity, or movers of all ages? Vanguard Research found that, although people aged 60+ were the least likely to move, those aged 60-69 have the most significant opportunity to access equity (27.9%) by relocating.
At the other ends of the scale, movers aged 20-29 and 80+ were the least likely to unlock equity. This is likely because these groups have different priorities. (Whilst the former might opt to be closer to work opportunities, the latter will likely prioritise their access to healthcare.)
The data also showed that movers from the West Coast and in the Northeast are best placed to unlock home equity by moving to a new county or state. California led the way in terms of opportunity; Nevada, Utah, Colorado, and Arizona also ranked highly.
Several cities in Florida were highlighted as major destinations for retire-and-relocators, such as Tampa, North Port, Miami, and Orlando. Nicknamed the “Sunshine State”, Florida is famous for its favourable climate. This, combined with a low cost of living, high-quality healthcare, and no state income tax makes Florida a very attractive destination for retirees. Better still, the housing market also looks in good stead, as it is the only state set to buck America’s gloomy house price predictions.
Whether you’re moving from a location that has benefitted from high house price appreciation (“lottery winners”) or you’re focusing on markets with lower-than-average prices (“bargain hunters”), you can unlock a significant amount of home equity by relocating.
Retirement is naturally proving the most popular time to make the move, though homeowners of all ages can put this strategy to work by moving into a cheaper housing market.
Alternatively, by buying in a fast-growing market now, you can increase your opportunities for high home equity extraction later down the line.
Contact us today to discuss property investment opportunities.
