New Mexico is overtaking Arizona and Florida as one of the most popular destinations for retirees, as Boomers are making the move from pricier states. According to a recent survey from United Van Lines, more than 4 out of 10 people moving to New Mexico cited retirement as a reason.
The National Association of Homebuilders (NAHB) states that many retirees are coming from California, with 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.
“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.”
As the more attractive option, New Mexico is near the bottom 20% of states, with annual real estate taxes averaging around $1,500, with an income tax rate of 4.9% and a median home value of $171,300. These lower taxes and rates make it especially attractive to homeowners who have accumulated a lot of home equity.
In addition to the purchase price, these buyers are also considering upgrades. Retirees wanting to maximize their equity in what will likely be their last home will want the most they can get, including small, maintenance-free yards and high-end kitchen appliances. According to Blake, energy-efficient features can lower monthly costs.
“These buyers spend double what a conventional buyer spends on upgrades, but they’re much more sensitive to monthly costs,” she said.
“Most 55+ buyers are looking to downsize,” Blake added. “If they can’t take advantage of their home equity, they’re not making the move.”
On top of the costs, areas such as Arizona and New Mexico are also relatively disaster-free. Boomers looking to buy for retirement would prefer more low-maintenance homes, away from the possibility of wind and flooding in hurricane- and tornado-prone areas.