By I hope your summer is off to a great start. Even during this unusually cool Kentucky June, there’s just something special about this time of year, when many of us are looking forward to taking the family to the beach to relax and soak up the sunshine.
On the flip side, I’ve been talking to a lot of my snowbird clients who have recently returned from the great South, and I’ve enjoyed hearing the ways in which they are surviving the higher cost of Florida housing. Even for those with generational ownership of a property, they are dealing with higher taxes, HOA fees, insurance, etc., and have had to get creative with how they manage their funds.
Since the first Baby Boomer bought a condo in Florida, the price of real estate has steadily risen. Sleepy beach towns went from sand dunes to crab shacks, becoming booming cities with high-rise condos. But there have been brief periods over the last 25 years when the price of a mortgage on that second home was still very reasonable, thanks to low interest rates.
Being able to snowbird in Florida has long been a sign of success for older generations, who used to settle down wherever they could find a job and stay there for 30 years. Many of them didn’t want to keep facing the harsh northern winters in retirement. That begat a housing boom in Florida like we’ve never seen.
Now that we’re seeing people pay closer to 7% on a second home, many of our snowbird families are finding it difficult to budget for two locations. In my opinion, these interest levels are temporary, but I have no idea whether this will take 5, 10, or 20 years to resolve, as every interest rate cycle is different.
So what can you do in the meantime? Many of my clients have determined that it’s not worth keeping a second home year-round. It makes more sense for them to just Airbnb a place for two months when they really want to use it. Some have ditched the pricier South Florida real estate and moved to the panhandle. Others have given up on Florida altogether and are now wintering in foreign countries like Mexico, Belize, or (gasp) Arizona. Where there’s a will, there’s a way.
I realize these are what some folks would call “first-world problems,” but I also want to acknowledge that it’s a big deal to many of my retirees. They worked really hard for a long time to earn the retirement of their dreams, and my job is to make those dreams a reality.
If snowbirding is an important goal for you, and you want help achieving it, give our team a call. There’s no judgment — we love the beach too. We’ll help you get there.
Article by David Smyth, Senior Partner and Wealth Advisor at Family Financial Partners — a financial services firm in Lexington, Kentucky.