Are you approaching retirement but what if you don’t quite have the budget for the two story log cabin in Aspen or the seaside villa in Monaco? If you’re looking for a cheap retirement spot that will meet a modest or thrifty budget, here are three states you might want to consider relocating to.
Now I know what you’re thinking-what region could be more ludicrous to recommend right now than the gulf coast. But hear the argument out, there’s a very good case to be made for a Florida retirement right now.
Warren Buffet lives by the motto “Be greedy when others are fearful, be fearful when others are greedy.” Apply the billionaire’s logic to the deep sea oil spill currently ravaging the Gulf of Mexico. Though it’s hard to believe when your gaze is transfixed to the live camera feed, at some point this leak will be capped, remediation efforts will begin in earnest, and the gulf coast will start on the long road back to normalcy. Exactly what that time frame is remains to be seen, but over the next six months a much clearer picture should form.
Retiring to Florida isn’t a good option for anyone who’s getting ready to retire at this exact moment (unless of course you’re comfortable remaining inland and simply enjoying the heat and humidity). But if your retirement start date is in that five to ten year window, Florida could be an excellent bet for you. The clean up process is sure to be extensive, and will depress already sagging real estate values. Mark my words, some folks will take a long term view on gulf coast real estate and end up making some handsome returns. Could you be that someone?
According to the National Board of Realtors, the median home price for Sarasota, Florida (a good bellwether locale) was $167,600 for the first quarter of 2010.
Nevada is another area that has seen some serious downward pressure on home values. Nevada was in the middle of a building boom when the housing crisis hit. The result? A huge surplus of homes at a time when demand is scarce. In fact, the Las Vegas Sun has reported that Las Vegas once again has topped the nation when it comes to foreclosure rates (through April 2010). Pile on top of that a comparatively high state unemployment rate, and you have all the ingredients for a cheap retirement option.
None of these economic doldrums have affected the hot, dry climate or the unsurpassed entertainment opportunities that the Las Vegas metropolitan area affords people.
The National Association of Realtors reports the median Las Vegas home price at $137,000 for the 1st quarter of 2010.
San Antonio, Texas
If you’re searching for warm weather and a cheap retirement spot but you don’t quite have the risk tolerance for Florida or Las Vegas, you might want to consider San Antonio, Texas. You’ll enjoy Texas’ characteristic hot summers and mild winters, but you’ll be purchasing a home in a much more stable real estate environment.
Know up front that San Antonio real estate has lost value recently, but the declines have been far more modest than those of other major metropolitan areas. The National Association of Realtors currently lists the median home price for San Antonio at a modest $142,200. This is off a mere 7.1% from the three year high of $153,200, which was reported in 2007. In the past three years, San Antonio home values haven’t fluctuated more than $10,000. That’s a pretty stable investment when juxtaposed with many other locations around the country.
One final consideration
Here you have three great budget retirement options: Florida, Las Vegas, and San Antonio. All enjoy warm weather, recreational and entertainment opportunities, and affordable home prices. But remember, home prices are always affordable for a reason. Financial periodicals love to come up with counterfactual findings on their annual list of most livable cities (I recall Yankton, South Dakota as one forehead scratching recent winner). They are able to churn up these unlikely winners because the methodology for determining “most livable” is heavily skewed toward housing value. But housing value has to be a reflection of housing demand. The reason it’s cheap to live in Yankton, South Dakota is probably because few people want to live there-and if few people want to live there, how can it be very desirable?
So remember, while there are diamonds in the rough, and I have tried to provide you with three potential diamonds, when you look for a cheap retirement spot you will have to be sacrificing something. Otherwise, it wouldn’t be cheap.
Median Sales Prices of Existing Single Family Homes. National Association of Realtors. 1st Quarter, 2010. http://www.realtor.org/wps/wcm/connect/497de980426de7ccb96eff03cc9fa30a/REL10Q1T_rev.pdf?MOD=AJPERES&CACHEID=497de980426de7ccb96eff03cc9fa30a. Accessed 6/21/10.
“Las Vegas Posts Nation’s Highest Metro Foreclosure Rate.” Buck Wargo. Las Vegas Sun. April 28, 2010. http://www.lasvegassun.com/news/2010/apr/28/las-vegas-posts-nations-highest-metro-foreclosure-/. Accessed 6/21/10.