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Retirees Take Housing Gains to Less Costly States

10:17 04Aug2005 Retirees take housing gains to less costly states By Linda Prospero NEW YORK, Aug 4 (Reuters) - Like many baby boomers planning to retire in the next few years, New York City resident Oscar Chamudes plans to cash in on hefty real estate profits and move to another state where the cost of living is lower.

The 58-year-old pediatrician, who lives in a two-bedroom Chelsea loft purchased for around $865,000 in 1999 that is now worth about $2 million, is mulling a move near Fort Lauderdale or Miami, Florida. He recently sold another home in Queens for $1.2 million, purchased 10 years ago for $240,000.

However, many retirees considering a move haven't ridden the real estate gravy train on the way up and will have fewer choices, since prices in many coastal cities and towns on the East and West coasts have also skyrocketed.

Retirees who dream of moving from Southern Alabama to Southern California for example, will be unable to do so, unless they are independently wealthy, said Mark Fagan, a sociology professor at Alabama's Jacksonville State University, who studies retirement migration.

"In many of these areas, the income has not increased to match the increase in median home prices. So people able to purchase that property are generally transferring equity from their other location," he said.

The average price for a two or three bedroom home costs about $1.2 million in Santa Barbara, California, for example, compared to about $150,000 in many Alabama towns, he said.

But Fagan said that more rural areas in many Southern states such as Georgia, Alabama, Tennessee, South Carolina and Louisiana, are courting and attracting retirees who can't afford housing in the more costly coastal regions.

"Those states are actively recruiting these retirees for the economic development that they bring to an area," he said.

The most popular sites are close to an urban area and have geographical amenities like freshwater lakes or rivers, but yet are removed from the everyday frenzy and higher prices of a large city, he said. College or university towns are also appealing to older residents.

"Retirees and college kids want the same thing -- a good time," he said.

Although Fagan believes that median home price is the primary determinant of where retirees choose to live, other factors such as property, income and sales taxes can also factor into a decision.

Property taxes are typically levied at the local level, but nine states -- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming -- have no broad-based personal income tax, according to the Center for Budget and Policy Priorities. Five states -- Alaska, Delaware, Montana, New Hampshire and Oregon -- have no sales tax.

But tax considerations are just one factor in deciding whether to relocate, said Terri Sexton, an economics professor at The Center for State and Local Taxation at the University of California in Davis.

"There are also other attributes of the location that come into play and often times they're more important," she said.

Jacky Teplitzky, a Realtor at Prudential Douglas Elliman in Manhattan, agrees. While some of her clients are cashing in on their large gains and migrating elsewhere, New York City still presents a good buying opportunity, even if price growth for an average apartment moderates from the 30 percent rise seen in the second quarter from the same period in 2004.

"I am an advocate of New York even with the fact that you have to pay high taxes," she said. "The truth of the matter is that over the last 30 years, New York real estate has been a safe bet as far as appreciation."

 

 

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