Serious and even part-time real estate investors pay close attention to cities that are popular retirement destinations, as they tend to indicate future growth and opportunity.
Recent data from real estate data tracking firm RealtyTrac revealed 40 cities throughout the country where at least 33% of the population is age 65 or older. Within the 40 cities, 25 saw annual increases in home prices and 27 saw a positive capitalization rate, which means rentals in those cities produced positive cash flow for investors.
RealtyTrac then ranked the top 15 of the 40 retirement hot spots based on annual percentage change in home prices as of May. It’s no surprise that Florida cities dominated that list, with the central Florida town of Dunnellon coming in at the top.
In Dunnellon, 38% of the population is retirement age or older and home prices rose more than 31% in the past year.
The six additional Florida towns in RealtyTrac’s top 15 list were Naples, North Fort Myers, Punta Gorda, Sun City Center, Venice and Orange County.
The rest of the towns included Hot Springs Village, Ark.; Douglassville, Penn.; Sun City, Ariz.; Rancho Mirage, Calif.; Florence, Ore.; Green Valley, Ariz.; Seal Beach, Calif.; and East Hampton, N.Y.
These markets will likely continue to grow over the next 15 years as a larger portion of the baby boomer generation retires. Baby boomers started retiring in 2011 and will continue to retire through 2029.
What’s interesting about retirement markets and baby boomers is that we’re likely to see more cities come into this top 15 list as large numbers retire and seek out alternatives.
Some retirees view their real estate investment as part of their overall nest egg – creating a future asset that will also provide a roof over their heads during retirement.
It’s possible, and makes sense, for some folks to use self-directed IRAs to purchase real estate. Some.
Before you head down that road, or advise someone to head down that road, you’ll do yourself a favor by first speaking with a financial adviser who can help you see the pros and cons of this.
Also, pay attention to market indicators like the one released by RealtyTrac. Where there’s growth, there’s potential.