With the rise in real estate prices observed in recent years and the aging of the population, more and more seniors are wondering about the relevance of a real estate purchase after 60, 70 or even 80 years. Some want to leave a house that has become too big, others want to be closer to their children or finally acquire a home that they will fully own. But at what age does this project cease to be financially interesting?
For Louis Beaucamp, editorial manager at Prosper Conseil, an independent wealth management firm, the question is often poorly asked. According to him, there is no universal age limit from which one would have to give up buying. On the other hand, several parameters change over the years: access to financing, duration of ownership of the property, liquidity needs or even transfer projects. So many elements that must be analyzed before signing a sales agreement.
There is no age limit for becoming a homeowner.
For the expert, setting a maximum age does not make much sense. “No, there is no age limit”affirms Louis Beaucamp. According to him, the purchase of a primary residence never comes down to a simple financial transaction. “Buying your main residence is never just a financial calculation, it is also a psychological act”. The feeling of security, the desire to no longer depend on a landlord or even the desire to pass on assets to one’s children continue to motivate many elderly buyers. “The stone has a symbolic force that reassures”he emphasizes.
The real criterion? The length of time you plan to keep the accommodation
If we had to remember just one element to determine whether a purchase remains relevant, it would be the holding horizon. “The decisive point remains the holding horizon”insists Louis Beaucamp. The reason is simple: acquisition costs, often wrongly called notary fees, take several years to be amortized. “If you sell too quickly, the purchase can become a bad transaction »he warns. Thus, a 75-year-old retiree who plans to stay in his home for the long term may well have an interest in buying. Conversely, a person likely to move in a few years might have more interest in remaining a tenant.
Why shopping becomes more complicated with age
Even when a project is coherent, several obstacles gradually appear. Financially, banks often become more demanding. Income may decrease upon retirement, loan terms shorten and the cost of borrower insurance increases. “At 35, time works on your side, but at 75, it’s harder to rely on credit leverage »summarizes Louis Beaucamp. In practice, senior buyers often have to mobilize more personal contribution to convince banks to finance their project.
The four mistakes seniors most often make
For Louis Beaucamp, several pitfalls recur regularly.
- The first mistake is to consider real estate as a risk-free investment. “Many households have a stone in their stomach, but real estate remains an asset like any other »he recalls.
- Second error: underestimate the complexity of a real estate purchase. “A good real estate purchase requires almost a small team”underlines the expert, citing in particular the broker, the notary, the craftsmen or even the heritage advisor.
- Third trap: immobilizing an excessive part of your savings in the operation. “Put too much contribution or buying cash can give a feeling of security »he explains. But this money can then no longer be used for other projects or to meet unforeseen expenses.
- Finally, the expert advises against automatically transforming an old main residence into a rental investment without first studying its real profitability.
In which cases is it better to remain a tenant?
Renting is not necessarily a bad choice, even in old age. “It can be more advantageous in large cities where purchase prices are very high compared to rents”observes Louis Beaucamp. It also presents an interest for people who wish to maintain a certain flexibility. “It is relevant if the person is mobile, not a homebody, unsure about their city of residence or likely to move closer to their children or a health establishment”he explains. Here again, the holding horizon plays a central role. “If you buy to resell three or four years later, you need a very favorable market to come out ahead”warns the expert.
Real estate or financial investments: how to decide?
For seniors with significant savings, the question is not limited to buying or renting. It also consists of determining whether it is better to invest in stone or keep your capital in other supports. “Real estate in France is case by case”recalls Louis Beaucamp. When it comes to a primary residence, the psychological aspect can justify a purchase even if it is not optimal financially.
On the other hand, for a rental investment, the analysis must be much more rigorous. “ The correct way to think is to calculate the actual yield : net of costs, net of taxation and net of mental load »insists the expert. According to him, people who favor mobility or wish to maintain a great deal of freedom can sometimes find it more beneficial to remain tenants while investing their savings in diversified financial investments.
Retirees remain attached to stone, but mentalities are changing
Louis Beaucamp finally observes a gradual evolution in behavior. “Across the country, retirees remain very attached to stone”he notes. However, some seniors today seem less inclined than before to concentrate most of their assets in real estate. “We observe that French real estate seems less sacred than before »explains the expert.
Tax instability and the search for greater diversification are pushing certain investors to look more towards the financial markets or towards real estate investments located abroad. One thing is certain: more than age, it is the consistency between the life plan, the financial situation and the holding horizon which must guide the decision to buy or not one’s main residence.
