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What Should You Consider in a 'Forever Home?'

What Should You Consider in a 'Forever Home?'

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. What should you look for in your "forever home?" Joining me to discuss that question is Ilyce Glink. She is CEO of Best Money Moves, and she is also author of a new book, 100 Questions Every First-Time Home Buyer Should Ask.

Ilyce, thank you so much for being here.

Ilyce Glink: It's fun. Thank you.

Benz: You've got a new edition of your book that is geared toward first-time homebuyers, great questions that they should ask before pulling the trigger on a house. I want to talk about a core demographic for us on Morningstar.com though, which is people who are getting close to retirement or in retirement. For a lot of people at that life stage, they are really thinking about, should I stay in this home or should I move to a different home where I maybe can stay throughout my retirement years. Let's talk about this idea of a "forever home." First of all, is there such a thing as a "forever" home?

Glink: I think the word "forever" is different for everybody. I have been in my house for almost 25 years, and to some people that is the forever home. It might be my forever home. But I also think that when you are starting to think about retiring, what we mean also by "forever home" is where is this going to be the place that you spend most of your retirement years.

One of the interesting things about the baby boomers is, they started doing re-retiring--the kids were gone, they retired, and they were like, oh, I'm going to move to the mountains. And then it was like, oh, five years later, I'm going to move to the beach. And then five years later, maybe their millennial children were giving them grandchildren--oh, and Susie is over here in Boston now. I'm going to going to go to Boston. Then Susie moved back home.

You have to kind of think about where you are going to be for these 10 to 15 years before your kids give you grandchildren. Or if you don't have kids, where are your friends going. Because this is the other side of it. We are seeing that you may not have grandchildren or fewer grandchildren. Not all of your children may have children. You may have grand dogs like my neighbors do. But you may want to retire near where your friends are. We are seeing a real trend toward people retiring in clumps--they are all going to move out of this place, this town, and they are all going to go over here to this mountain town together, and then go over here to this villa.

It's interesting to look at what your future, your 25 or 30 years, looks like and make your list. Like I say for my first-time buyers in the book, make your wish list, make your reality check, what can't live without, and then take a look at your finances in retirement to see what you are going to be able to afford to do. That should be where the conversation begins--with a bottle of wine.

Benz: Good advice. Let's say someone is thinking that they actually want to try to stay put in one place. Let's talk about what sorts of things they should prioritize if they are thinking about staying in their home or thinking about relocating to a home that might be appropriate. What are some of the key features or amenities that they should be sure to consider? And of course, it's very individualistic?

Glink: It is but it isn't. When you move to the house that you raised your family in, school district is probably top of your list. It is for a lot of people. It should be if it isn't. But when you are thinking about your forever home, school districts are a lot less important. Not because your property isn't going to appreciate in value. If this is your forever home, you may say, I'm pretty much dying in this house. You don't care as much about that.

Benz: Appreciation.

Glink: You don't. I mean, you care because you always care. But you really don't care in terms of sending your children to the schools and what's happening there. As long as the school districts are fine, you really want to probably put healthcare and access to healthcare, access to public transportation, maybe it's single-level living, maybe those knees are going.

Benz: You want it to be safe?

Glink: You want to be safe. You want to have a community that's important to you, and that might be a 50-plus community, the sun communities that are out there. Pulte has done a wonderful job with those. Very, very popular, appreciating nicely for those who live there.

Benz: But some people don't want that at all. They want age diversity in their community.

Glink: Right. Or maybe you want to live near a downtown which is near culture, night life, and restaurants and you want to recapture what you used to do when you were single or dating your spouse or partner and be able to walk to everything and have this great city culture experience. Or maybe you want to live in the middle of an island far from everybody.

But whatever is important to you, that has to go down on your wish list and then the reality check is, OK, but you do have to think about aging in place, what that means for the amenities in the house itself. Maybe it's extra wide doorways, the single-level living, an extra room for a possible caretaker down the line, extra room for maybe visiting children and grandchildren. Maybe it means you need to be on a bus line so that when you can't drive anymore, that easy access to transportation. So, all of those things should be thought about.

Benz: Those are all sort of quality of life considerations. Let's talk about the financial piece. Some people have significant home equity. Should downsizing be in their sights as a way to enlarge their investment portfolio while potentially getting them into a more size-appropriate home?

Glink: Size-appropriate is really interesting. The baby boomers have expanded their retirement income.

Benz: In retirement they are getting bigger.

Glink: They are getting bigger. They are buying bigger houses with more square footage. I'm not quite sure why. This whole downsizing thing is interesting. I do think at some point in time your forever home will be smaller than the 4,500-square-foot house you might be living in today. I do think that's what you are referring to, and I think that's appropriate. You just want less to take care of.

For some people though, what they are doing is buying condos and then they just want to travel in retirement. A single-family house, there are a lot of things to worry about in terms of maintenance. It's why maintenance-free communities are so nice. Some people just want to be in a condo or an apartment, lock the door, and take off. I think that all of those are considerations as well.

The downsizing thing is interesting, because in terms of saving money, where you've been living the last 20 years--and this is actually a structural problem we are seeing in the real estate market right now--which is, not enough homes in the market. People like me whose kids are now just flown the nest, we should be downsizing or moving and leaving our homes. But it's so darn cheap to live there, Christine, the mortgage rate I have is so cheap, the amount I have to pay is so inexpensive. Yes, real estate taxes are high, but if I sold and moved to a smaller place, I probably pay the same or more and get less for my money.

We are going to be seeing more people age in place simply because it's more advantageous. If that's going to be the case and you like where you live, then you have to think about renovating your home to accommodate the sort of creaky knee syndrome …

Benz: Your needs as they unfold.

Glink: Yes.

Benz: Ilyce, always great to get your insights. It's such an important topic. Thank you so much for being here.

Glink: Thank you.

Benz: Thanks for watching. I'm Christine Benz for Morningstar.com.

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