Moving Back to the City in Midlife
When life is making you lonely, you can always move: Downtown
The lights are much brighter there
You can forget all your troubles, forget all your cares
So go downtown, things'll be great when you're
Downtown, no finer place for sure
Downtown everything's waiting for you
— From the ‘60s hit song, "Downtown"
Chicago is where Doug and Susan Laney met, fell in love and married. During their 25-year marriage, they relocated to Australia, San Diego and two Chicago suburbs. But as their son headed to college a couple of years ago, the Laneys decided it was time to go back to where it all started.
The couple traded their 4,000-square-foot suburban townhouse for a Chicago rental condominium half that size, just blocks from Wrigley Field and Lake Michigan. “ It’s a really vibrant neighborhood,” says Doug, 55. “There are a lot of shops, bars and restaurants. We’re just really excited to be right in the thick of it.”
It turns out the Laneys aren’t the only ones headed downtown in midlife or for retirement.
Leaving Suburbia for the City
Unlike their parents’ generation — which preferred to age in place — many boomers are ditching suburban homeownership for rentals in urban centers.
The U.S. Census Bureau found people age 55 and older represented the largest increase in renters in the decade following the Great Recession. From 2007 to 2017, rentals increased 38% for people over 55 and 43% for those over 65. By contrast, rentals rose less than 10% for people under 54.
"You don’t know if you want a townhouse. You don’t know if you want a high-rise. Do you want to be close to public transportation or a highway? There are so many decisions.”
“When you look at urban areas that are walkable to cultural amenities, that is where you are seeing the rent versus buy decision tip to renting,” says David Funk, a Roosevelt University real estate professor.
In places like Denver, where the median home price is $435,000 and climbing, it can make more economic sense to rent.
Chris and Ronda Caillouet, both 58, took advantage of Denver’s hot real estate market two years ago. They sold their 3,200-square-foot suburban home, turned a tidy $200,000 profit, and rented a townhouse in the city.
As empty nesters, the Caillouets wanted to be free of home repairs and devote more time to their careers. “We came to the realization that we could sell the house, pay off all of our debt and rent,” says Ronda.
Three Considerations: Home Maintenance, Taxes and Health
Home maintenance is a top consideration Denver financial planner Karl Frank asks his clients to weigh when contemplating renting versus buying. He says if they’re not willing to spend up to 2 percent of a home’s value on annual improvements, they should rent.
Frank also says state and federal taxes on profits from the sale of a home — capital gains taxes — are another consideration.
Currently, the Internal Revenue Service allows a single person to exclude $250,000 of capital gains on the sale of a home; $500,000 for a married couple filing jointly. So, if you don’t have to pay capital gains taxes after a home sale, it might make sense to rent.
Frank also urges clients in their fifties and sixties to factor in their health. He says renting provides the flexibility of moving closer to a medical provider, if your health takes a turn for the worse.
Checking Out Neighborhoods and Your Preferences
Even if you lived in a nearby city years before you moved to the burbs, you might want to get reacquainted with it before heading back.
Neighborhoods change; your taste and needs may have changed.
Just ask Bruce and Jill Weininger, who stayed in Airbnbs over long weekends before relocating to Chicago from the suburbs a few years ago.
“You don’t know if you want a townhouse. You don’t know if you want a high-rise,” says Jill. “Do you want to be close to public transportation or a highway? There are so many decisions.”
When a City Move Doesn't Turn Out as Planned
The Weiningers also learned the best laid plans don’t always work out.
After a year of renting a Chicago townhouse, they decided they wanted something smaller. So they moved again — to an apartment. This time, the couple used their age as leverage to negotiate a more favorable long-term lease.
As they told their landlord: “We’re not going to trash the place. We’re stable and we’re willing to make a long-term commitment,” says Jill.
Similarly, after a year in their rented Denver townhouse, the Caillouets also moved again. But it wasn’t their choice. The owner decided to sell the property. “That was a problem we weren’t expecting. It caught us off guard,” says Ronda.
A year into renting a condo in Chicago, Doug and Susan Laney also had a change of heart. They loved the place so much, they convinced the owner to sell it to them.
The Laneys aren’t ruling out a future move, but, for now, they’re not betting on it. “The plan is to leave here feet-first!” says Doug.