Arizona and Florida have long been popular retirement destinations — not only for their warmer climates, but factors such as cost of living and local taxes as well. These same factors are making other areas increasingly attractive, with New Mexico now edging out its Southwest neighbor and the Sunshine State as the No. 1 retirement destination, according to a new survey by United Van Lines
“I think New Mexico is getting a lot of its traffic from California,” observed Deborah Blake, principal at The Ipsum Group
. “People are exiting because of cost of living, and property and income taxes.”
California currently has the top individual tax income rate of 13.3%, and it ranked eighth out of all 50 states in average real estate taxes, based on NAHB analysis of data
from the 2017 American Community Survey and U.S. Census Bureau, at $4,623 annually. (New Jersey — another state seeing a fair amount of outbound migration — tops that list with average real estate taxes of $8,485 per year.)
New Mexico, on the other hand, is near the bottom 20% of states, with annual real estate taxes averaging around $1,500. An income tax rate of 4.9%
and a median home value of $171,300
also make it a more attractive retirement option — especially for buyers who have accumulated a fair amount of equity in their current homes.
“Most 55+ buyers are looking to downsize,” Blake noted. “If they can’t take advantage of their home equity, they’re not making the move.”
Buyers are looking not only to purchase price, but also upgrades, as ways to maximize their equity and create a home they can live in independently for years to come. They believe this will be their last home, so they want to finally have everything they have pinned on their Pinterest boards and dog-eared in home and garden magazines — from wine refrigerators and pro-style kitchen appliances to built-in grills and fireplaces for their back patios. Small, low-maintenance back yards with open space and great views are also big pluses for these buyers and can generate lot premiums for the developer, too.
“These buyers spend double what a conventional buyer spends on upgrades, but they’re more much sensitive to monthly costs,” she added, which is why cost of living is an important consideration in boomers’ retirement decisions. This includes energy-efficient features
that can help lower their monthly costs — a strong concept that resonates well with this market.
Destinations such as New Mexico and Arizona are relatively disaster-free zones as well, which Blake anticipates may be a growing concern, given the impacts of wind and flooding in hurricane- and tornado-prone areas and boomer buyers’ desire for more low-maintenance housing as they age. Boomers working later in life and adult children more frequently living at home may also impact when and where 55+ buyers choose to retire.
With three decades of real-life experience — 22 years with Del Webb and the last seven-plus years advising clients across the United States at The Ipsum Group — Deborah Blake is uniquely qualified to provide pragmatic advice in the areas of consumer research, community feasibility, visioning, amenity and lifestyle programming, branding, marketing, sales, residential product, and operations of 55+ targeted and age-qualified communities.