Renewed buyer interest in southern golf communities has real estate agents from Virginia to Florida working full days again. Stock market portfolio gains over the last year are fueling people’s decisions to buy the retirement and vacation homes they have deferred since the market collapsed.
I am asked frequently “Is this a good time to buy?” and the follow-up question, “Will home prices drop more?” My honest answers are, respectively, “Depends” and “Doesn’t matter.” Frankly, the first question is incomplete and the second one is irrelevant. Here’s what I mean:
That first question should be “Is this a good time for us to buy?” The decision to make such a big investment should always be driven by personal financial and lifestyle interests. The answer will be different, say, for the couple who bought their home 20 years ago and paid off their mortgage as opposed to the couple who bought their primary home just before the recession and will be lucky to recoup their original purchase price. The former should have enough equity to buy their new golf community home with cash; the latter will require at least some financing. But borrowing is not necessarily a deal breaker because mortgage interest rates remain near historic lows.
The financial component is mitigated, in many cases, by the cost of living differences between where people live now and where they might want to relocate in the south. The differences are stark enough that a couple living in, say, Boston, could decrease their annual costs by 22% by moving to Asheville, NC, and by 26% by moving to Wilmington, NC. A Stamford, CT, couple would spend 37% less living in the Myrtle Beach area, or 39% less in Greenville, SC. Annual property taxes in many southern communities are the same as the monthly tax bill in some New England cities.
If prices continue to trend down, they are almost certain to do so more steeply in the less desirable north than the south. And if they move up, which historic precedent says they will do, the increase will be faster and farther where the sun shines on golf courses and on the cost of living. If you have a house with equity and a plan to move to your dream retirement home, don’t let perfect be the enemy of this good time to execute your plan.
Larry Gavrich works with couples planning to relocate to a southern golf community. He does not charge customers for his services. (He is paid referral fees by real estate agents.) Larry can be reached at email@example.com.