Are today’s retirees more likely to buy or rent?

  • Rent. (60%, 6 Votes)
  • Buy. (40%, 4 Votes)

Total Voters: 10

Like the changing of the guard, Baby Boomers have begun to retire en masse. The ranks of retirees will increase rapidly in the coming years as this crowded generation finally reaches retirement age.

What will this geriatric shift mean for the real estate market?

With 5.2 million residents 65 years and older, California’s rapidly aging population is a sustaining force and driver for our real estate market. Further, the highest population of homeowners in California are retirees, with 76% of those 65 and over owning their home, according to the U.S. Census.

Age group

Homeownership rateRental rate

Under 25



25 to 29



30 to 34



35 to 39



40 to 44



45 to 49


50 to 54



55 to 59



60 to 64



70 to 74



75 and over74.7%


Baby Boomers are currently between the ages of 52 and 70. Therefore, their homeownership rate ranges from 67% to 76% in the Western U.S. Census region, which encompasses California. This is well above the average California homeownership rate of just 54%. But will Boomers’ high homeownership rate take a hit as they enter retirement?

Retiring homeowners will often sell their home in order to move closer to family or to warmer spots. Some even relocate to cash out their home equity in their existing property to assist with living expenses. Whether or not they choose to buy again depends on personal and financial preference, including whether they:

  • wish to leave a home as part of their will;
  • are able to keep up with home maintenance;
  • plan to be in their retirement home for long before transitioning to assisted living, moving in with family or other arrangements; or
  • move to a part of the country with more expensive housing than where they are now (like California compared to most other parts of the country).

A recent report by Trulia finds that based on pure financials, retirees are better off renting than buying in almost all of the nation’s major metropolitan areas. This conclusion is made under the presumption the retiree won’t be around to cash out their post-retirement home’s equity gained during ownership.

However, pride of ownership cannot be measured. The American Dream is strong with this generation, and they won’t give up homeownership easily.

first tuesday forecasts most Baby Boomers who currently own in California will continue to own in retirement. In a majority of cases, this will mean selling and buying a replacement home that’s smaller and closer to family or amenities. Further, the alternative — renting — is very expensive in California.

For example, take Laguna Woods, just south of Irvine, which has the highest share of retirees in California. Here:

  • the median home value is $306,000;
  • the median rent is $2,000 a month; and
  • Trulia estimates it’s 56% cheaper to buy than rent — if the equity gained during homeownership is taken into account(if not, then it is slightly cheaper to rent than buy).

If retirees are looking for less costly but hassle-free homeownership, they can consider buying a condominium. These smaller, usually cheaper homes come with more restrictions and additional homeowners’ association (HOA) fees. But it also usually means homeowners don’t have to worry about exterior maintenance or landscaping, which can be a boon to aging homeowners.

To help your client see the financial benefits of buying versus renting, see RPI Form 320-4: Buy-Versus-Rent After-Tax Analysis.

Agents: what types of homes are your retiring clients interested in purchasing or renting? Share your experiences in the comments!