In the mountain towns of nearby Summit County, home sales surged in 2020. (Photo: Shutterstock).

Duane Duggan, Realtor and Author RE/MAX of Boulder

The ability to work from home has changed the behavior of homebuyers. Not only are they searching for floor plans that offer home office and homeschooling spaces, they are no longer tied to a specific location. Many also want to live in places where they can enjoy the outdoors. In the mountain towns of nearby Summit County, home sales surged in 2020. Normally, when sales increase in a primarily second-home market, it does not usually have a significant effect on infrastructure, such as schools. The recent boom is different, however, because homebuyers are purchasing homes in recreational, resort, or vacation areas in order to work remotely and bring their kids in tow.

Along with soaring demand is a drop in inventory and rising home prices. These new market forces will likely continue for some time. If you are hoping to find a second home or retirement home, now is a great time to buy before prices go up too much more.

There’s no better time than now to buy a retirement home. If you change your mind in 15 years and don’t want to move to the home you buy today, you can still sell it and use the proceeds to buy a home where you want to live. The home-buying environment is perfect right now for making such a decision: mortgage rates are still at historical lows and the rental market is strong. The combination of these two factors make it possible to rent out your future retirement home – and even have a positive cash flow. There may even be tax advantages for you if you treat the property as a rental on your tax return. Of course, be sure to check with your professional tax advisor first.

Odds are pretty high that your future retirement home will cost a great deal more 15 years from now than it would today. We don’t know what the interest rate will be 15 years from now, but the likelihood is high that they won’t be any lower. This is another argument for taking action now, so you can get the home price and interest rate locked in. Otherwise, it may be tough to afford the home 15 years from now.

For example, if you’re thinking of moving into your retirement home 15 years from now, a 15-year mortgage could be just the ticket. A tenant paying rent now would help support the current mortgage payment, and in 15 years, you could own your home free and clear. After the home has been a rental for 15 years, you will probably need to fix it up and make improvements to transform it into the retirement home that’s right for you. If cash flow is tight, you can still take out a 30-year mortgage loan to keep the payments smaller, although the equity build-up won’t be as fast.

In Colorado, we have quite a number of “snowbirds,” or seasonal retirees. When the snow starts falling, these snowbirds travel to their retirement home in warmer climes, such as Arizona. They return to Colorado in the spring and summer. A great example is to buy your retirement home in Arizona and rent it out until you are ready to use it for yourself.

If you go ahead and buy a retirement home today and finance it so that you own it free and clear by the time you retire, there’s yet another benefit. Rather than using the proceeds from the sale of your primary residence to buy a retirement home down the road, you can use the proceeds to help fund your living expenses during your retirement.

Your Realtor® has connections across the nation. If you’re thinking of looking for a retirement home in another city, ask for a referral and get the process started. Be sure to consult your tax professional to go over these ideas as well.

Learn more about the second-home market in Colorado mountain towns from these articles:

coloradosun.com/2020/12/28/mountain-resort-real-estate-aspen-telluride-vail-steamboat
summitdaily.com/news/breckenridge-places-5th-among-us-cities-experiencing-real-estate-booms-during-pandemic
coloradosun.com/2020/07/27/urban-exodus-colorado-resort-towns-second-home-buyers-school-enrollment

By Duane Duggan. Duane has been a Realtor for RE/MAX of Boulder in Colorado since 1982 and has facilitated over 2,500 transactions over his career, the vast majority from repeat and referred clients. He has been awarded two of the highest honors bestowed by RE/MAX International: The Lifetime Achievement Award and the Circle of Legends Award. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail DuaneDuggan@boulderco.com, call 303.441.5611 or visit boulderco.com.