The United States is increasingly a nation of renters — the share of rental households is at a 20-year high, a recent Harvard study found. Some of today's renters cannot afford a house and have no choice while others are in the younger age groups that traditionally make up a major part of the rental population.
But older adults represent an increasingly common breed of renter — those in their later years who could afford to own but prefer to rent. People 55 and older now account for 42 percent of the growth in U.S. renter households. One of every three new renter households has a high enough income to afford a home yet has opted to rent.
We're seeing in many new apartment communities that a large percentage (of tenants) have been baby boomers who are moving out of a large home or moving away from home ownership. It's really not surprising — 10 years ago that's all we talked about, the baby boomers, and now that's actually coming to fruition.
Meanwhile, as boomers join millennials as renters in big numbers, home ownership has dropped to its lowest level since 1989. It now stands as 63.7 percent, down from 69.1 percent near the peak of the real estate bubble.
A large part of that decline is due to people who lost their homes in the crash. But it is also due to financially comfortable couples.
Retired folks make a good profit selling their homes. With kids out of college and working elsewhere, many decide they no longer needed a big family home with a pool they did not use and a lawn they were tired of cutting.
Also, many are tired of driving every time they want to go out to eat. Many want to live in cities or areas with a downtown.
After deciding to sell, there is another hard decision: Buy again or rent? If they buy a condo there would be property taxes, insurance and monthly association fees. If they paid cash, they would no longer have that money to invest.
Times have changed, and it's not guaranteed any more that you're going to make money in real estate.
Many rent a 1 or 2 bedroom apartment. They figure they are earning enough on their investments — including the money they kept by not buying — to essentially live rent- free for now. They also have greater flexibility than if they owned.
They may not stay put for more than five years. They may decide to go out to the West Coast to get out of the heat. There is no hassle of ownership.
Many like the freedom of renting. They don't want to be tied down.
Whether they rent or buy, older people pondering a move need to consider many factors — their lifestyle, their interests, their medical needs.
If buying to be close to grandchildren, people should think about what happens if the kids' parents decide to move. Maybe you're not sure if your son is going to stay in Chicago or move to San Diego, then what would you do?