They say you’re never too old to learn, but is there a cutoff when it comes to homebuying?
The answer feels like a resounding no, especially when the median age for a homebuyer is now 59 years old, according to the National Association of Realtors®.
Moreover, the average age of first-time buyers has also increased—it now takes prospective buyers until the age of 40 to achieve the American dream.
But what if you’re 65? And retired? Are you really at the right age to start thinking about buying a home?
That depends roughly on where you are financially and if you’re in a position to handle the increased monetary hardships of owning a home in recent years.
But experts still agree that if you’re financially stable, owning a home is the right investment at any age, and as an added bonus, it could set up your family for years to come.
Advice to older homebuyers from Suze Orman
Let’s take a real life example and examine. On her podcast “Women & Money,” financial adviser Suze Orman received a letter from a listener asking whether buying a home at 65 would be setting herself up for failure.
Orman was quick to tell her to go for it—but only after she completed a fairly informative and fruitful assignment.
“I want you to do something which is called play house,” Orman said, suggesting that the best way to know if the senior could afford homeowning finances was to go through the motions. The first step would be to set up the initial capital.
“You’re going to hopefully put at least 20% down,” she began. “Besides the amount of money you’re gonna put down, you need to have an 8 to 12 month emergency fund.”
Then, it came time to talk about a mortgage.
“Truthfully, you should be doing a 15-year, fixed rate mortgage because you don’t still want to have a mortgage at the age of 95,” Orman suggested. “You want to have it paid off by the time you’re 80.”
With these numbers in hand, Orman asked her listener to make a list of all the bills that come with homeownership: mortgage, insurance, property taxes, monthly maintenance fees, and emergency fund.
She advised her listener to add the total up and find the difference between what she’s paying now, while still renting, and how much more she would need to buy a house. Then, the real test would begin.
“At the beginning of every month for the next six months, take [the difference] and put it in a money market account or some account paying you interest and see what that feels like. Are you late? Can you do it at the first of every month? If you can, and it’s easy, then I got news for you—your job is stable or your income will remain for a long time, so yeah, you can afford to buy a home.”
Now, here’s the best part: If you can swing the payments, then all the money you socked away can now be put toward a down payment. If not, you still have saved some money, which is never a bad thing.
Buying early and building wealth
Ideally, if you’re over the age of 60, you’ve already owned property and are just looking to buy your next home.
If that’s the case, the good news is that you’ve likely accumulated enough wealth with your existing home to facilitate an easy move. Buying early has proven to be the greatest advantage for homeowners.
For example, those who bought a home at age 30, the average first-time homeowner age in 1990, have a 22.5% greater net worth at age 50 compared with those who bought in their mid-to-late 40s, according to the Realtor.com® Generational Wealth Report.
But even if you are 40, 50, or 60 years old, buying for the first time is in your best interest, if one of your goals is to accumulate wealth.
Homeowners enjoy a significant financial advantage over renters, with approximately 38 times the net worth, according to the Federal Reserve’s Survey of Consumer Finances.
To give perspective, for boomers and older homeowners, Florida and the Southeast have proven to be standout markets where housing wealth grew to considerable heights since 2019.
In Realtor.com research, Spartanburg, SC, ranked first, where housing wealth grew 135.4%, or $8.8 billion in the last few years, while Gainesville, FL, ranked second, with gains of 133.2%, or $10.9 billion.
What older buyers are looking for
“As people are living longer, there are buyers making moves in their 70s and 80s,” says Cara Ameer, a real estate agent in Florida and California.
She explains it’s not surprising that more people older than 65 are considering a home purchase—especially for those who are flush with cash.
“Most people tend to pay cash at this age,” Ameer explains. “Or if they qualify, they do a reverse mortgage—typically not taking on a big loan or term to pay it down.”
But regardless of how they fund the purchase, the main goal for seniors looking to buy is to be set up in a place just for them. While grandchildren and living near adult kids are always a “big draw,” Ameer says that after retiring, moving is all about adopting a new “lifestyle.”
“After 75, it becomes about health, aging in place, access to good health care, assisted living and, most importantly, being close to family who can help take care of them if needed.”
She adds: “Location tends to play a factor when the retiree is younger and wants to enjoy a nice climate as well as state income taxes or not—or a lower tax rate like Florida, Nevada, Texas, or Arizona. But not as much once they reach an age that they need to consider being near family.”