As winter fades and the first signs of spring emerge, many people start thinking about their favorite vacation spots. Whether it’s a beach, a lake, or a mountain retreat, a common thought arises: What if we lived there?
For retirees and those nearing retirement, this dream can feel especially tempting. After years of hard work, the idea of owning a second home in a beautiful location seems like the perfect reward.
The pandemic sparked a rise in second homes
According to Ian Katz, a real estate agent in New York City, interest in second homes surged during the COVID-19 pandemic. With travel restrictions and remote work becoming the norm, people wanted alternative places to live.
“The pandemic brought people closer, and now they want exposure to multiple climates while keeping in touch with family,” Katz said. For many retirees, a second home became a way to enjoy different seasons and be near loved ones.
Mortgage rates have slowed the trend
However, the rush to buy second homes has slowed significantly in recent years. One major reason? Rising mortgage interest rates. Higher borrowing costs have made it more expensive for many buyers to afford additional properties.
This has led to a decline in second-home purchases since 2020. People who once considered a vacation home are now thinking twice due to the increased financial burden.
Why retirees may still buy a second home
Despite higher mortgage rates, retirees and near-retirees remain a strong segment of second-home buyers. That’s because many in this group don’t rely on large, long-term loans to make their purchases.
Instead, retirees often use their savings, pensions, or proceeds from selling a previous home to buy a second property. This financial flexibility allows them to move forward with their dream, even when mortgage rates are high.
Is a second home right for you?
If you’re considering a second retirement home, here are a few key questions to ask yourself:
- Can you afford it comfortably? Even if you’re not taking out a large mortgage, property taxes, maintenance, and insurance add up.
- Will you use it enough? A vacation home sounds great, but is it worth the cost if you only visit a few times a year?
- Is it a good investment? Some areas appreciate in value more than others, making resale potential an important factor.
- How will it affect your lifestyle? Managing two properties can be stressful, especially if they are far apart.
Weighing the pros and cons
A second retirement home can provide relaxation, adventure, and even a potential financial benefit. However, it’s important to consider both the advantages and challenges before making such a significant decision.
For many retirees, the dream of owning a home in their favorite vacation spot remains alive. The key is to ensure it aligns with your long-term financial and lifestyle goals.
