As more baby boomers head into retirement, cities that attract retirees could be opportune spots for real estate investors, according to a recent report from RealtyTrac, a real estate data source.
From a list of 40 cities with a population of 33 percent or more retirees, RealtyTrac identified the “Top 15 Retirement Hot Spots for Real Estate Investing” by looking at various data, including annual percent change in home prices as of May 2013.
Other factors included average temperature, annual chance of sunshine and the “cap rate,” which shows whether rentals in the market generally have a positive cash flow.
Of the top 15 cities, seven are in Florida: Dunnellon, Naples, North Fort Myers, Punta Gorda, Sun City Center, Venice and Orange City.
Other popular states are Arizona (Sun City and Green Valley) and California (Rancho Mirage and Seal Beach). The remaining cities listed are Hot Springs Village, Ark.; Douglassville, Pa.; Florence, Ore.; and East Hampton, N.Y.
“Even if you’re not retiring in the immediate future, they’re good places to invest and eventually live in yourself,” said Daren Blomquist, vice president of RealtyTrac.
In some locations, where home prices dropped very low during the recession, especially Florida, “(These homes) are good for long-term investment rather than the ‘fix and flip.’ Over time, that home is going to appreciate in value, especially in markets where the population is going to increase over the next 15 years,” Blomquist said.
He points out that since those many of those classified as baby boomers were born between 1946 and 1954, adding 65 years to that means most will retire between 2011 and 2019 — suggesting strong future growth in retiree-friendly communities.
Those who are looking for a faster return on investment might consider Seal Beach, Calif., or East Hampton, N.Y., Blomquist said.
“(They are) not as good for rental property but more appropriate for investors looking to fix and flip. You get a bigger profit with a single flip,” because home prices are higher.
Overall, Blomquist said, the report shows there are “different types of investing opportunities” in retirement hot spots that are suitable for different types of investors. — CTW Features