They say you’re never too old to learn, but is there a cutoff when it comes to buying a home?
The answer sounds like a resounding no, especially when the median age of a buyer is now 59 years old, according to the National Association of Realtors®.
In addition, the average age of first-time buyers has increased—it now takes would-be buyers up to age 40 to realize the American dream.
But what if you’re 65? And retirement? Are you really the right age to start thinking about buying a home?
That probably depends on where you are financially and if you are in a position to handle the increasing financial difficulties of owning a home in recent years.
But experts still agree that if you’re financially stable, owning a home is a worthwhile investment at any age, and as an added bonus, it can set your family up for years to come.
Advice for older home buyers from Suze Orman
Let’s take a real life example and check. On her podcast “Women & Money,” a financial advisor Suze Orman he received a letter from a listener asking if buying a house at 65 would be putting himself at risk.
Orman was quick to tell him to take it—but only after he had completed an instructive and fruitful assignment.
“I want you to do something called a play house,” Orman said, suggesting that the best way to determine whether seniors can afford home ownership is to make decisions. The first step will be to set up the initial investment.
“Hopefully you’ll drop at least 20%,” he began. “Regardless of the amount of money you’re going to put down, you need to have an emergency fund for 8 to 12 months.”
Then it was time to talk about the mortgage.
“In fact, you should be doing a 15-year, fixed mortgage because you don’t want to have a mortgage when you’re 95,” suggests Orman. “You want it to be paid for when you are 80 years old.”
Armed with these numbers, Orman asked his listeners to list all the debts that come with owning a home: mortgage, insurance, property taxes, monthly maintenance fees, and an emergency fund.
He advised his listener to add up the sum and find the difference between what he is paying now, still renting, and how much he will need to buy the house. Then, the real test would begin.
“Every beginning of the month for the next six months, take it [the difference] and put it into a money market account or some interest paying account and see how that feels. Are you late? Can you do it at the beginning of each month? If you can, and it’s easy, I’ve got news for you—your job is stable or your income will last a long time, so, you can buy a house.”
Now, here’s the best part: If you can switch payments, all the money you’ve taken out can now be put into a lower payment. If not, you still save some money, which is never a bad thing.
Buying early and building wealth
Ideally, if you are over 60, already own a property and want to buy your next home.
If so, the good news is that you may have accumulated enough equity in your existing home to make an easy move. Buying early has proven to be a huge boon for homeowners.
For example, those who bought a home in their 30s, which was the average age of first-time homeowners in 1990, have a 22.5% higher net worth by age 50 than those who bought in their mid-40s, according to the Realtor.com® Generational Wealth Report.
But even if you’re in your 40s, 50s, or 60s, buying first is in your best interest, if one of your goals is to accumulate wealth.
Homeowners enjoy a greater financial advantage than renters, about 38 times the total, according to the Federal Reserve’s Survey of Consumer Finances.
To give perspective, for boomers and older homeowners, Florida and the Southeast emerged as the standout markets where housing wealth grew to the highest level since 2019.
In a Realtor.com survey, Spartanburg, SC, ranked first, where real estate assets grew by 135.4%, or $8.8 billion over the past few years, while Gainesville, FL, ranked second, with a gain of 133.2%, or $10.9 billion.
What older consumers want
“As people are living longer, there are consumers moving into their 70s and 80s,” he said. Dear Ameer, real estate agent in Florida and California.
He explains that it’s no surprise that many people over the age of 65 are considering buying a home—especially those who are cash-strapped.
“Most people tend to pay in cash these days,” Ameer explained. “Or if they do qualify, they do a reverse mortgage — usually they don’t take out a large loan or a period of time to pay it off.”
But regardless of how they finance the purchase, the main goal of seniors who want to buy is to be placed in their place. While grandchildren and living close to older children are always “a big deal,” Ameer says that after retirement, moving is about taking on a new “lifestyle.”
“After 75, it’s about health, aging in place, getting good health care, getting help and, most importantly, being close to family who can help take care of them if needed.”
He adds: “Location is often an influence when the retiree is young and wants to enjoy good weather and state income taxes or not—or low tax like Florida, Nevada, Texas, or Arizona.”
