Straight Talk on Purchasing Your Retirement Home

Posted by Mary Ray on Wednesday, June 1st, 2011 at 5:27pm.


Straight Talk on Purchasing Your Retirement Home: Part 1

Back before the housing crisis began, it wasn't really a question whether investing in retirement property was a good idea or not. Of course it was. Housing prices appreciated at an expected percentage annually, and that's all that had to be taken into consideration. After the stock market plummeted and frenzied investors took their money over to real estate things got shaken up a bit. Well, more than a bit...but we don't need to go into the details of the housing bubble. Most of us are well aware of what has transpired over the past several years.

The real topic or question that many individuals who are planning for their retirement have on their mind today is simply this, "Is purchasing my retirement home now a solid investment?"

Let's take a logical look at what's happening in SW Florida, and specifically Cape Coral properties.

Investing in Cape Coral Property

According to the latest statistics provided by the Lee County Economic Development Office, home sales are steady, but more importantly, median prices are on the rise.

April of 2011 had median home prices of just under $119,000, which is quite a jump from $101,900, which were the prior month's average prices. Prices are expected to continue to rise, at an average rate of 17% over last year.

So, those are nice statistics, but that still doesn't answer your question does it? Stacy Johnson, staff writer and SW Florida real estate investor recently wrote an excellent article for MSN Money's web site. In the article, she talked about looking at the big picture.

The prior decline of the housing market should not be a detriment when considering buying Cape Coral property now. If that was logical, it would also make sense to never buy property or stocks for that matter. Falling prices shouldn't teach us that it's not wise to invest in property. Instead, the troubles of the past should teach us that gambling on short term price swings (like we experienced just before the bubble burst, when Flip This House was the hottest show on TV) is not wise.

Instead, preparing for your retirement by purchasing Cape Coral property should be based on these long term factors:

  • Invest in Cape Coral real estate while prices are still low but on a steady upward trend
  • Buy Cape Coral property only if you are certain you will be keeping the home for at least four years. The longer you own your home, the more your home's value will absorb and recoup the initial transaction costs. After that, you'll build solid equity.
  • Plan for your home to appreciate, but don't count on it. The advantage of owning your retirement home is more than that. Remember, you gain equity just by paying off your mortgage and you have an asset you can live in and enjoy.
  • Buy when long term factors are in your favor, like now. Current low interest rates allow you to lock in a fixed rate mortgage, so you can budget without worry.

Along with those factors, it's also vital to keep in mind that investing in Cape Coral property, which is largely retirement based, will always provide you with the ability to sell your home if the need arises. If it's a toss-up between buying a Cape Coral property or a home down the street from your sister who lives in Idaho, you need to look at the risk factor involved. Southwest Florida appeals to the entire nation as a potential retirement option. That's exactly why the area was the first to feel the effects of the housing bubble...and why it's the first area to recover.

Remember, when you are planning for retirement and looking to purchase your retirement home, take all the variables into consideration.

This article is the first of a series we will be presenting on retirement investing. Check back for our next topic where we will provide inside information on the benefits of purchasing your retirement home after season.

By David Sporleder | Sporleder-Ray Realty Group || Google+


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