The Relocation Dilemma: To Rent or to Buy?

It’s one of the biggest decisions for retirees making a move; answering these 6 questions can help you make it

Patrick J. Kiger,

AARP

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En español

Published June 09, 2023

Jeanine and Tony Consoli photographed at their home on Friday, June 2, 2023 in Sarasota, Fla

Jeanine and Tony Consoli at their home in Sarasota, Florida, where they moved from Pennsylvania in 2022.

Thomas Simonetti

When Jeanine Consoli, a retired teacher embarking on a second career as a freelance travel and food writer, and her husband, Tony, decided to sell their town house in Bucks County, Pennsylvania, and relocate to Florida, their first thought was to buy another home.

But the couple had a difficult time finding a house to purchase in their target market, Sarasota, which was red-hot.

“The Realtor canceled on me three or four times, saying, ‘I’m sorry, the property is now under contract,’ ” Jeanine, 57, recalls. “That’s why we decided to rent.”

It turned out to be the right choice for them. The couple found an affordable two-bedroom apartment in a building Jeanine says reminds her of a Brooklyn-style brownstone (except that it’s pastel-colored). It’s close enough to Tony’s office that the 58-year-old insurance executive can walk to the office rather than fight commuter traffic.

“We’ve lived in this apartment for a year, and we love it,” Jeanine says. Though the couple still plan to buy a house, renting has given them a chance to take their time and get to know their new hometown better.

Whether you’re already retired or getting a head start by moving early to an eventual retirement destination, if you’re a longtime homeowner, you face an important choice: Should you buy another home or rent instead?

The pastel-colored building, left, where Jeanine and Tony Consoli rent in Sarasota, Fla.

The Consolis rent an apartment in the pastel-colored building on the left but say they are looking to buy a home in Sarasota in the near future.

Thomas Simonetti

‘The ultimate question’

Retirement planners and relocation specialists say it depends on an assortment of factors, including your financial state, the housing market in your new locale, how well you know the area and how confident you are that it’s your last move. Both choices have potential upsides and downsides, so you’ll need to find a balance that best suits you.

“To rent or buy may be the ultimate question facing relocating retirees,” says Mark Charnet, founder and CEO of American Prosperity Group, a retirement planning firm in Pompton Plains, New Jersey. “Neither option is superior, as it really depends upon each retiree’s situation.”

About three-quarters of baby boomers own homes, but recent data suggests that rate is starting to decline, says Doug Ressler, a senior analyst and manager for real estate intelligence firm Yardi Matrix.

“I think we might be at the beginning of an inflection point, where the number of boomers renting will go up,” he says.

Here are six questions to consider in deciding whether to rent or buy when you relocate.

1. How are your finances?

Though home rents spiked during the COVID-19 pandemic, renting generally remains a cheaper option than taking out a new mortgage, Ressler says. According to data from Yardi Matrix and Moody’s Analytics, the median monthly rent in the first quarter of 2023 was $471 less than the median mortgage payment, based on a 30-year fixed rate mortgage with a 90 percent loan-to-value ratio (the proportion of property value to loan balance).

Buying can cost considerably less in the long run if you’re able to pay cash for a home or to make a big enough down payment to secure a low monthly mortgage, says Derek Miser, an investment adviser and the CEO of Miser Wealth Partners in Knoxville, Tennessee. But up-front expenses such as closing costs can be high, he notes, and owning means ongoing outlays for property taxes, homeowners insurance and maintenance.

With renting, your up-front costs are lower — basically, a security deposit equal to a month or two of rent — but rents can rise substantially from lease to lease. From April 2019 to April 2023, the median cost of an apartment in the United States went up by more than 20 percent, from $1,619 to $1,967, according to Rent.com, a listings website.

2. How much do you want to simplify your life?

Moving from Huntington, New York, to St. Petersburg, Florida, in 2021 made Chris McDonald’s life a lot easier. “I sold my house, which was hard to take care of,” he says. “I have arthritis, and it also needed a lot of repairs.”

McDonald, 70, who works part-time as an online tutor, rents a condominium in an age 55-plus complex where he doesn’t have to fix anything and has access to four swimming pools.

After years as a homeowner, Jeanine Consoli also enjoys the reduced responsibilities of living in an apartment. Instead of a three-story town house, “now we have a two-bedroom, one-level home,” she says. “It’s easier to clean, easier to cool, easier to maintain.”

“The desire for simplicity could be a big factor for people,” says Barbara O’Neill, a retired Rutgers University professor and author of the book Flipping a Switch: Your Guide to Happiness and Financial Security in Later Life. “Not having to do maintenance on a house, not having to mow the lawn or shovel the snow.”

On the downside, if one of your joys in life is puttering around with tools and perusing home improvement magazines, you might feel that you’re missing out as a renter. “Owning a home gives you the opportunity to modify it to your specific wants and needs,” Miser notes.

3. How clear are your long-term plans?

Renting is a good option if you’re moving somewhere you’re not certain you’ll want to stay for the rest of your life, says Scott Fuller, an Arizona-based real estate agent and relocation adviser.

An older couple “might be going someplace that they’ve visited a couple of times, and they think they’re going to like it, but they’re not quite sure,” says Fuller, who specializes in helping people move from Southern California and the San Francisco Bay Area. “So they’re hesitant to buy something right away.”

In such cases, he suggests seeking a short-term lease, which gives you a chance to see whether the new location really fits your lifestyle and budget and the flexibility to buy if you quickly find that it does.

If you’re moving away from friends and family, renting instead of buying may give you a chance to see how well you can manage being that far apart, O’Neill says. “Sometimes, people may just want to rent as an experiment, to see how it affects their relationships and how often they’re able to travel and see people.”

At the end of the day, it’s about certainty, or lack of it, says Kris Jerke, president of Ascend Financial in Sioux Falls, South Dakota.

“If you’re comfortable, after doing thorough research and visiting the area you’re considering, then I’d recommend buying versus renting,” he says. “If you’re a bit unsure and want to grow more comfortable with your decision over time, then renting is the way to go. You’re making a decision that likely will be for the remainder of your years, so you want to make sure you’re comfortable with it.”

4. How well do you know your retirement destination?

Even if you decide right away that a particular city or town is perfect for your needs, it will take time getting to know the place to figure out what neighborhood is best for you. Renting for a few months to a year while you learn the area can help you make a more informed choice about where to put down roots.

When the Consolis landed in Sarasota, they wanted to find a house close to the beach, Jeanine says. But after seeing how congested the route from the water to downtown could be when the city is full of visitors, she changed her mind. “I had a dream of living out there, but now I don’t want that,” she says.

McDonald says that when he got to St. Petersburg, “I intended to buy but didn’t know where I wanted to settle.” His rental “is working out for right now,” he says, but the two-bedroom, two-bath condo is too big for his needs, and “it’s on the water, which is treacherous during a hurricane,” so he’s scouting other parts of town.

“I plan on looking around for a smaller place in St. Pete, maybe a house this summer,” he says. “I would only move if I could buy.”

5. How, and when, might your physical needs change?

Most of us want to age in place, but that may require changing the place as we age. Think about what health and mobility issues you or a partner might face down the road and whether buying or renting would provide more or better options to meet future needs.

Buying gives you more freedom to make renovations for safety and accessibility, such as adding an entrance ramp, grab bars or a curbless shower. You may want to consider those potential costs when weighing a purchase, and they can range widely, from a few hundred bucks to install sensor lights to $50,000 for comprehensive remodeling, according to home improvement site Fixr.

Keep in mind that the cozy bungalow that suits an empty-nest couple now might have design limitations that complicate the sort of makeover you might eventually need.

Federal law allows renters to make age-in-place modifications in limited circumstances, but you’ll need to work it out with your landlord, and you may have to restore the place to its original condition if you leave. “It actually could cost more to take it out than it did to put it in,” says Richard Acree, founder of ADA Inspections Nationwide, a Brentwood, Tennessee, firm that inspects buildings for Americans with Disabilities Act compliance.

The upside to renting is flexibility. Just as you can look for a cheaper place if your rent gets too high, you can shop around for an apartment building with elevators if the stairs to your charming walk-up get to be too much for your joints.

6. Are you willing to wait for your dream home?

Even if you really want to buy, it might pay to wait. “Inventory is so low, because with interest rates still high, nobody wants to sell their house and be exposed to a much higher interest rate when they buy another one,” O’Neill explains. “That may be a reason to rent — simply to wait out this gridlock, which could take a while.”

However, if you get a windfall from selling your old home and have enough cash to buy a new one without taking out a loan, there may not be as much of a reason to wait, she notes.

Jeanine and Tony Consoli are switching from a year-to-year lease to a slightly more expensive month-to-month lease in anticipation of resuming their search for a home to buy. “We’ll probably take a look around this summer,” Jeanine says.

She doesn’t regret the delay. Renting “gave us freedom to figure out what’s our next chapter.”

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Patrick J. Kiger is a contributing writer for AARP. He has written for a wide variety of publications, including the Los Angeles Times Magazine, GQ and Mother Jones, as well as the websites of the Discovery Channel and National Geographic.