Using the Housing Market for Retirement
There are a lot of people who plan to use the housing market for their retirement. Data related to the housing market has been improving consistently for several months now. I have neighbors who have been looking for a second property for quite some time, and they finally took the plunge, buying a second home in beautiful Charleston, South Carolina. Eventually, the couple plans to sell both of their properties when they are ready for retirement, and they will probably settle down in a new location in the sun. Retirement for them isn’t going to be tomorrow.
These people have money, and they work hard for it. The gentleman is a partner at an accounting firm, and the lady is a retail consultant, helping high-end, specialized retailers design and sell products to the equestrian market. What they did is they researched the housing market in Charleston for several years, spending as much time there as possible, and they bought one of the least expensive homes in the most expensive areas. Location, location, location, as the saying goes. The house needs work, but it will be a good project for them. Apparently, they paid about half of what the previous owner had invested into the house, and they should do well on it, if there’s not another housing market crash, when retirement time comes.
I think this is a great way for people to save for retirement if you have the cash flow and financial position to afford more than one property. In the case of my neighbors, they are both professionals with no children, so it makes it easier for them to do this. They aren’t really interested in the stock market, and they don’t have a lot of holdings in mutual funds. They figure they’ve taken the time to really get to know the housing market in Charleston, and they bought the right house in the right neighborhood for the right price.
Buying a retirement property or a second home in a warm climate is a goal that many people have. Most people do this through condominiums. Speculating in the housing market is different than investing in it, and it’s the same with the stock market. Do you want to research and build a position in a good asset, or are you there just for a flip?
Many real estate agents buy second or third homes, fix them up, and put them back on the market. It’s a very complimentary business strategy for them. I would say that using the housing market as a retirement strategy is probably a better way to go over the stock market. As we all know, both markets experience bubbles and crashes, and both have their pros and cons. But, the housing market has one thing going for it that the stock market does not. You can always live in your house, whereas a stock is just a number on your screen.
I have cousins who had to walk away from their home in Arizona, because they couldn’t sell it, and they were in over the heads. It was a tough lesson for them, but now, they don’t live in a home any larger than they need. And that’s the big thing when saving for retirement using the housing market. Take the time to research your market, and wait for the right opportunity to buy. It’s a similar analogy for the stock market. Buying right is everything.