It’s better to rent a new home than to buy one in retirement—that is, only if you don’t like your heirs.
That’s according to Trulia’s latest Rent vs. Buy Report, which considers whether it is cheaper to rent or buy a retirement home.
Buying a home in retirement is only more beneficial than renting one if retirees care about leaving an inheritance, the report says. The value of the equity in a home is a major contributor to the financial benefits of homeownership, but if retirees don’t have any heirs or don’t wish to leave an inheritance, the equity in a home loses its importance.
Consequently, when this value is dismissed, the benefits of owning a home as opposed to renting a home drop.
All things considered, renting a home is the superior option for the retired households that don’t care about the equity in their home at the end of their life in 98 of the 100 cities with the most retirees, the report says.
For these folks, the only two cities where it is less expensive to purchase a home than to rent one are The Villages, Florida, and Danville, Virginia, where it’s 14% and 7.1% less expensive, respectively.
But it’s a different story if retirees do care about leaving an inheritance. For them, it’s less expensive to buy a home in all of the 100 U.S. cities with the largest share of residents aged 65 and older than it is to rent one.
The Villages, Florida; Naples, Florida; and Venice, Florida are the top three retirement cities where it is the cheapest to buy, as opposed to rent, the report says.
Read Trulia’s Rent vs. Buy report.
Written by Mary Kate Nelson
