February 2021 Newsletter

Many AARC member communities are tallying up the result from a surprisingly successful 2020 – unlike the traditional description of “retirement community,” our members are typically destinations, and getting away from urban areas was a major (and obvious) trend last year.  Retire Tennessee has touted a report that showed their state as having topped U-Haul’s list of one-way moves for the first time.  And many developer communities faced more of a supply challenge (having enough homes completed) than a demand one.

The nature of the pre-retiree buyer for retirement destinations has changed due to the pandemic – and, more broadly, more pre-retiree buyers are recognizing the quality of life that destination retirement communities afford.  Doug Yearley, CEO of luxury homebuilder Toll Brothers, was interviewed by TIME in January 2021:

“If you were thinking, “My retirement plan is to go to Florida, to go to Hilton Head, to go to Charleston, S.C., wherever,” and you thought, “I’m gonna work till 63, so maybe around 61 let’s start looking.” The 55-year-old is now saying, “You know what? I’ll fly back to New York one week a month. My boss is gonna let me make it work. We’re going earlier.” We’re seeing more of that.” 

The devastation the virus wrought on families across the globe is tragic.  But those of us whose jobs involve buyer attraction must recognize the changes brought about by COVID, and plan for the future.  That planning and learning effort is why I sought out a resource like the AARC more than a decade ago, and why I believe our organization can help you in 2021.

Please let me know how we might do that for you and your community!

Bill Houghton
Chair, The AARC


How Long Will a $500K Retirement Nest Egg Last?

Can you get a whole retirement from half a million dollars?

Cynthia Measom, GoBankingRates.com | January 15, 2021

RyanJLane / Getty Images

When pondering the question, “How much do I need to retire?” there is never a one-size-fits-all answer. What one person could happily live on, another might be dissatisfied with. Although conventional wisdom suggests having a retirement nest egg of at least $1 million, that’s a difficult number to achieve for many Americans.

To paint a more realistic picture of retirement finances, GOBankingRates determined how long $500,000 will last in every state. To do this, the study analyzed average spending data — including groceries, housing, utilities, transportation and health care — for people ages 65 and older.

When you’re trying to gauge how long $500,000 will last you, where you choose to live is crucial due to the difference in cost-of-living expenses across the nation.

For example, as far as location goes, Mississippi ranks as the top choice for making $500,000 last as long as possible. According to the data, however, $500,000 in Mississippi will last only about three months longer than it would in Kansas, which is the second-best place to retire with $500,000.

If Hawaii, California or New York are your dream retirement destinations, $500,000 won’t last nearly as long. These states are considered some of the worst choices to retire in with that size of a nest egg as savings. For example, if you were to move to Hawaii instead of Mississippi, you would get about seven and a half fewer years, on average, out of your retirement savings.

But location isn’t the only thing to consider. You also need to decide how you’ll spend your money, and weigh that against the average cost-of-living expenses in your chosen state. Perhaps you plan on sharing a home with someone else who can afford to pay half of the expenses. Or maybe transportation costs aren’t an issue for you because you plan to use a free transit system.

Whatever the case, to make your $500,000 nest egg go the distance, it’s important to choose a retirement destination that will best serve your specific needs at the most affordable cost.

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ABOUT THE AUTHOR
Cynthia Measom is a personal finance writer and editor with over 12 years of collective experience. Her articles have been featured in MSN, Aol, Yahoo Finance, INSIDER, Houston Chronicle, The Seattle Times and The Network Journal.

Note from the AARC:

Here are the results for AARC member states:

Alabama

  • $500,000 will last: 10 years, 11 months and 29 days

Arkansas

  • $500,000 will last: 11 years, 2 months and 3 days

Florida

  • $500,000 will last: 9 years, 11 months and 5 days

Georgia

  • $500,000 will last: 10 years, 11 months and 11 days

Mississippi

  • $500,000 will last: 11 years, 7 months and 18 days

New Mexico

  • $500,000 will last: 11 years, 3 months and 19 days

North Carolina

  • $500,000 will last: 10 years, 3 months and 25 days

South Carolina

  • $500,000 will last: 10 years, 3 months and 25 days

Tennessee

  • $500,000 will last: 10 years, 11 months and 11 days

Virginia

  • $500,000 will last: 9 years, 8 months and 18 days

Methodology: In order to find how long $500,000 will last across the country, GOBankingRates first found (1) the national average annual expenditures for people 65 and older, sourced from the Bureau of Labor Statistics’ Consumer Expenditure Survey data covering July 2018 through June 2019. Then, GOBankingRates created (2) state-level annual expenditure estimates by multiplying the national figure by each state’s overall cost-of-living index score for Q1 of 2020 from the Missouri Economic Research and Information Center. Finally, GOBankingRates found (3) how many years $500,000 will last in each state by dividing $500,000 by each state’s average annual expenditures estimate. All 50 states and the District of Columbia were then ranked with No. 1 being the state where $500,000 will last the longest and No. 50 being the state where it will run out most quickly. GOBankingRates provided supplemental information on the average annual cost of groceries, housing, utilities, transportation, and healthcare for people 65 and older in each state by again using MERIC’s cost of living indices for each category to factor out national estimates from the CES. All data was collected on and up to date as of June 22, 2020.


Double Digit Growth in Home Prices 

Jing Fu, NAHB.com| January 26, 2021

In November, national home prices continued to rise at a fast pace, fueled by strong demand and low inventory. All 19 major markets saw double-digit growths in home prices.

The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, rose at a seasonally adjusted annual growth rate of 18.3% in November, following a 21.9% increase in October. It marks the fourth consecutive month of double-digit growth in home prices. On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 9.5% annual gain in November, up from 8.4% in September. It is the fastest pace of home price appreciation since February 2014. Strong demand, low interest rates and tight inventory together pushed home prices to new highs amid the COVID-19 pandemic.

Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), rose at a seasonally adjusted annual rate of 12.9% in November, following a 19.3% increase in October. On a year-over-year basis, the FHFA Home Price NSA Index rose by 11.0% in November, after an increase of 10.3% in October. It confirmed rapid growth in home prices for this month.

In addition to tracking national home price changes, S&P reported home price indexes across 19 metro areas in November (Detroit metro area data was missing in November 2020 because there are not a sufficient number of records for the month of November for Detroit).

In November, all 19 metro areas reported positive home price appreciation and their annual growth rates ranged from 9.1% to 27.7%. Among all the 19 metro areas, seven metro areas exceeded the national average of 18.3%. New York, Seattle and Boston had the highest home price appreciation. New York led the way with a 27.7% increase, followed by Seattle with a 22.4% increase and Boston with a 21.9% increase.

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2020 Migration Trends:  U-Haul Ranks 50 States by Migration Growth

Tennessee claims No. 1 spot for first time; Texas in top 2 for fifth straight year

UHaul/PRNewswire | January 4, 2021

PHOENIX, Jan. 4, 2021 /PRNewswire/ — If you’re of the opinion Tennessee is a fun place to visit and would be a beautiful spot to live, take a number and get in line. U-Haul® customers are well ahead of you.

The Volunteer State posted the largest net gain of U-Haul® trucks crossing its borders in 2020, making it the No. 1 U-Haul growth state for the first time.

Growth states are calculated by the net gain of one-way U-Haul trucks entering a state versus leaving that state in a calendar year. Migration trends data is compiled from more than 2 million one-way U-Haul truck customer transactions that occur annually.

Tennessee’s influx of do-it-yourself movers during a turbulent year marked by the coronavirus pandemic means that a state other than Florida and Texas tops the growth rankings for the first time since 2015, when North Carolina led the way.

U-Haul customers made Texas and Florida their top two destinations from 2016-19. Texas had the largest net gain of one-way U-Haul trucks for three consecutive years before Florida flipped the order and became No. 1 last year. Texas is second for growth, and Florida third, for 2020.

Ohio, Arizona, Colorado, Missouri, Nevada, North Carolina and Georgia round out the top 10 states for 2020 growth as self-movers continue to migrate to the Southeast, as well as markets in the Southwest, Midwest and Rocky Mountain regions.

California ranks last by a wide margin, supplanting Illinois as the state with the greatest net loss of U-Haul trucks. California has ranked 48th or lower since 2016. Illinois has been 49th or 50th since 2015, when U-Haul began ranking states based on annual net gain.

“I’m seeing a lot of people from California move (to Tennessee) because they’re attracted to our lifestyle,” noted Jeff Porter, U-Haul Company of Nashville president. “Tennessee has no income tax and is very business-friendly. There are plenty of jobs. People and companies are taking note. Places like Nashville, Murfreesboro and Clarksville are attracting tons of new residents. Nashville is ever-growing, and even the era of COVID-19 isn’t slowing that. We were seeing movement before the virus hit, but I think the situation has pushed a lot more people away from the West Coast to our state.”

East and Central Tennessee are enjoying the biggest gains in U-Haul arrivals. The top growth cities include Knoxville, the Tri-Cities, Cookeville, Clarksville, Cleveland, Murfreesboro and Maryville.

Arrivals of one-way U-Haul trucks into Tennessee jumped 12% while departures rose only 9% over 2019, with that disparity catapulting it up the charts. Arrivals accounted for 50.6% of all one-way U-Haul traffic in Tennessee, which ranked No. 12 among growth states a year ago.

“The best thing about Tennessee is the southern hospitality. People are decent to one another,” said Clay McQuade, U-Haul Company of Knoxville president. “I believe the draw to Tennessee is the rural atmosphere. The government is still not so oppressive on zoning and regulation, so people are able to build, and cities are friendly to business. Tourism is a big draw in this region, mostly for the Great Smoky Mountains. There’s plenty to do outdoors.

“U-Haul is growing right alongside the state. We just added adaptive reuse conversions of closed Kmart® stores for new facilities in Kingsport and Bristol, and are currently building a ground-up store in Knoxville to meet customer demand for our products and services.”

While U-Haul migration trends do not correlate directly to population or economic growth, the Company’s growth data is an effective gauge of how well cities and states are attracting and maintaining residents.

U-Haul is the authority on migration trends thanks to its expansive network that blankets all 50 states and 10 Canadian provinces. The geographical coverage from more than 22,000 U-Haul truck- and trailer-sharing locations provides a comprehensive overview of where people are moving like no one else in the industry.

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