If you retired in the Bay Area or the Central Coast and lived in your home for several decades it’s likely that your net worth has increased dramatically due to soaring home prices. Ironically, your buying power may have dropped significantly over the same period because local and state inflation has dwarfed the national averages used to calculate increases in retirement checks. In other words, you may be asset rich and cash poor.
One way to flip that situation involves cashing in your home and moving, either locally, regionally or nationally. Even the state legislature is considering changing the property tax rate portability to encourage longtime residents to leave areas where there are extreme housing shortages. Like any big financial decision, it takes a lot of research and planning before taking action. Every situation is personal and there are often issues other than financial. This article is not specific advice, I’m just going to touch on some, not all, of the financial considerations and offer one idea for a local solution.
For retirees desiring to take net value out of their homes, moving, downsizing, or both, may make sense, but the tax code can impact that decision. Check in with your professional tax advisor. In addition to the rules for capital gains and reinvestment, there may be other tax issues to consider.
Don’t underestimate the cost of selling a home and physically relocating yourselves, your pets and everything you own even after multiple yard sales and donations to thrift shops, especially if you’re going far, lower moving cots are one reason to stay in the area.
Total cost of living is a major force in relocation decisions and it should be thoroughly examined. Housing, utilities, insurance, vehicle registration, fuel, Homeowner’s Association Fees, service district taxes and local sales taxes are just some of the items that need checking. If you don’t travel and/or have energy efficient transportation, the cost of travel may not be important, but if you simply have to get the monster RV on the road every weekend it could be a factor.
Personally, I prefer to compare in dollars. For instance, there is more to property taxes than the rate, there are the voter approved additions and the assessed value. When you put them all together they come out to bucks, how much and how likely they are to change year over year is another issue.
The percentage of county residents over age 65 is projected to more than double to 24 percent by 2060. If San Benito County wants to keep its valued older generation, it’s going to have to encourage the development of suitable local housing relocation options for that demographic. That strategy offers the added benefit of injecting the enthusiasm and energy of youth into our older, established, neighborhoods.