Home prices have been on a tear lately, rising 18% in just the last year. It has homeowners sitting on unprecedented amounts of equity — about $8.1 trillion of it, in fact. According to Black Knight, the average homeowner gained 11% in tappable equity during just the first quarter of this year.
Selling is likely first to mind for many older homeowners. According to ATTOM Data Solutions, the average home seller makes a whopping $94,500 in profits these days — up more than $34,000 since just last year.
Those profits can help boomers achieve any number of financial goals, from padding their nest eggs or making investments to buying a new house or even retiring early.
“This age is a sweet spot because they’re starting to think about retirement and getting a certain dollar amount in the sale of their home can expedite their retirement,” Bull says. “It can bring them to that next chapter in life and give them financial cushioning that they never thought possible.”
According to a survey from Realtor.com, around 12% of baby boomers plan to sell their homes in the next year — a larger share than any other generation surveyed. Many of those sellers will choose to rent, opting for lower-maintenance apartments or townhomes. Others will buy but downsize, like Patti and Mike, or use the funds to move closer to grandkids or to sunnier locales.
If you choose to buy, agents say proceed with caution: By going this route, you’ll face the same high prices you just capitalized on. Supply is also limited in most housing markets, so you may find yourself with few homes to choose from — not to mention some stiff competition.
“This is a smart time for older homeowners to sell their home — but only if they have a clear plan of where they are going,” says Glenn Phillips, CEO at Lake Homes Realty in Hoover, Alabama. “The challenge is that, while they may get a premium for their current home, they will also pay a premium for their next home while also facing very limited choices. To sell fast without a clear plan could end up being costly over the long term.”
However, for those astute homeowners, this is the perfect time to tap the equity to solidify their retirements, investments, senior in-homecare, or use that equity to ensure you are completely debt free come retirement. In fact, you have never been in a better cash position. As a baby boomer you know full well the interest rate environment we are currently in. You have also seen inflation, that reminds you of the economy of today. Your home can make you “inflation-proof.”
The time to take action is before, actually right now before inflation fears hit your equity, interest rates, and retirement. Speak to a consultant that has seen the economic time we are in today and we will be tomorrow: https://refi.com