Making Our Move

Richard Connor

VICKY AND I ALWAYS knew our retirement home would need to be near our two sons and their families, so we could be part of our grandchildren’s lives. It’s taken a few years and a pandemic, but we finally made that happen.

We purchased a new home in Monmouth County, New Jersey, in September 2023. We’ve now moved in, and we’re already enjoying more time with our grandsons. We’ve also met some very welcoming neighbors. After three months, we’re convinced we made the right move.

It wasn’t, however, a great time to buy a home. Housing inventory was tight, so sellers had the advantage. Mortgage rates were high, and have risen further since we closed. A Wall Street Journal article last month claimed that housing is “less affordable than any time in recent history.”

When we started looking for a new house, I spent a lot of time pondering how to finance the purchase. We looked at a wide variety of homes. We saw older condos priced in the $300,000 range. We looked at some new, high-end townhomes on a golf course, with elevators, that started at $1 million. We also looked at older single-family homes, mostly ranch style, priced in the $700,000 to $900,000 range. This latter group invariably needed some significant upgrades.

I mentally grouped the homes into three categories based on price. Depending on where you live, these prices may seem low, high or just right. But they’re the reality in Monmouth County. The median selling price in November 2023 was $655,000, though there’s a very wide range around that median.

The three groups I identified were: low, meaning $400,000 and below; high, at $1 million-plus; and everything in between. The price of the new home we purchased would likely drive what we’d do with our beach house. If we purchased a lower-priced home, we could afford to keep our beach home as a vacation property. At the higher end, I would have been uncomfortable owning and maintaining two expensive homes, so we most likely would have sold the beach house.

In the middle, there was considerable gray area. We theoretically could afford two homes, but it would require a monthly outlay that would likely keep me up at night. So, of course, the new house’s purchase price was $779,000—squarely in the gray zone. After much discussion, we’ve decided to keep the beach home. We’ll rent it out during the summer to generate additional income that’ll offset the expense of owning two homes. Our favorite seasons at the beach house are fall and spring, so this is a good compromise.

We took out a mortgage to buy the new house, and we still have a small amount owed on the beach home’s mortgage. I’ve spoken to our mortgage person about refinancing the beach house so our new, primary residence has no mortgage. This makes financial sense because there’s a strong tax incentive to have a mortgage on the rental property. Expenses incurred in owning a rental property, including mortgage payments, are deductible against the rental income received. Our hope: Interest rates will drop in the coming year before we refinance.

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