Should I Buy a Home in a 55-Plus Community?

Is it wise to buy a home in a 55-plus community?

It’s a good question, and Money Talks News reader Kim has asked it:

“I was wondering if it is good idea to purchase a home in a 55-plus community. I hear that they are difficult to sell and don’t retain their value.”

In some ways, buying a home in a retirement community is like any other home purchase. But in other ways, it’s not. Here are a few tips.

Before you buy, think sell

In her question, Kim says, “I hear they are difficult to sell and don’t retain their value.” Well, as with any home, that’s going to depend on supply and demand, the specific community and the individual house.

Fortunately, checking historic prices is relatively easy to do. If you’re looking at a house, search the county records online, see what it’s sold for in the past, and get an idea of whether the trend is up or down.

One of the main things that drives price appreciation in any kind of housing is an expanding demand with a limited supply. Is the population of the area increasing? See a lot of building going on? These are good signs.

Keep in mind that until a community is completely built out, as a seller, you’re competing with the developer. That could put a lid on appreciation. For example, it’s going to be hard for you to sell your house for $200,000 if the developer is selling identical new homes for $180,000.

And, before you buy, be sure to check any selling restrictions. Some communities force you to use their real estate agents. Others may prohibit putting signs in the yard. Many will require your buyer to be screened for age, finances and health before you can sell to them. In short, before you buy, see what the deal is if you should decide to sell.

Other tips

• Rent first. Hopefully, it goes without saying, but wherever you consider buying a home, unless you’re intimately familiar with the area, rent first. Nothing beats experience with a community before becoming a permanent member.
• Buy in the off-season. If you’re moving to Florida or Arizona, you’re going to get a better deal in July than you will in January.
• Check the taxes. Some states, like Florida, don’t have state income taxes. But they do have high property tax rates.
• Review the financial records of the homeowners association. The last thing you want is to buy into a community that’s bleeding cash or about to approve a giant assessment. Visit the homeowners association office and ask a few questions.
• See what’s going on. When you retire, you’ve got more time on your hands. What will your community provide to occupy you?
• Research the rules. You know your community has age restrictions, but that could be the tip of the iceberg. Does it allow pets? Smoking a cigar outdoors? On-street parking? Talking on your balcony after 10 p.m.? You may be amazed, and turned off, by the restrictions you encounter.

Bottom line? While buying a home in a 55-plus community can be like buying a home anywhere, there are differences. As I’m fond of saying, always do checks before writing them.

Hope that answers your question, Kim.

About me

I founded Money Talks News in 1991. I’m a CPA, and I’ve also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.