In Arizona, snowbirds are as common as cacti and gorgeous sunsets. But becoming a snowbird is more complicated than just buying a second home and spending your winters sunbathing by the pool. The two-household lifestyle demands some compromises.
Here are some of the issues and costs to explore if you’re thinking about making the switch to a snowbird lifestyle and buying a second home in Arizona or elsewhere.
Should you downsize?
The first issue you’ll need to address is how much you’re willing to give up for your second life, as it may be difficult to sustain two equal standards of living in two separate homes.
However, simple living can be a freeing experience for some. This is especially true when you’ve got the natural beauty of Southern Arizona as your backyard to explore. Before buying a second home, you’ll need to decide what you can live without. If you can’t stomach the idea of living without that premium espresso machine, then maybe renting might be a better idea.
Obviously, your largest expense will come from buying the second home. Even if you’ve already paid off your primary home, acquiring a second mortgage is no small undertaking.
Typically, snowbirds occupy states with lower housing costs, such as Florida, Colorado, and Arizona, but if you desire to live on the beaches of Florida or in the mountains of Tucson, you’ll pay a higher price.
Getting a loan for a second home can also present difficulties, especially if your primary home isn’t paid off. According to the National Association of Realtors, 29% of vacation home buyers pay all cash. The same report notes that 45% of vacation home buyers finance less than 70% of their purchase.
The takeaway here is that you should have significant savings put away for a down payment on your second home. The secondary housing market works a bit differently than the traditional market, with more price swings and higher interest rates. Go into your housing search expecting a different experience than you had buying your original home.
Just as you need insurance on your primary residence, you’ll need the same for your second home. The only difference is that insurance on a second home will likely cost you more.
Insurance companies generally charge more for vacation homes for a few reasons: the home sits unoccupied for months at a time, making it more at risk for break-ins and fire or water damage, since there’s a chance no one will be around to get help.
Some insurers, such as AIG, take into account if you have a caretaker or a maintenance company who checks on your home. Other insurers, such as State Farm and Nationwide, tack on a respective 10% and 20% increase to cover secondary homes.
Installing a security system in your second home can help reduce your premiums, but it also costs money to install and maintain the system. You’ll need to investigate costs to see if the premium discount is worth it.
You’ll also need to consider if you want to purchase disaster insurance for floods, earthquakes, and fires. Fortunately, Southern Arizona is relatively light on natural disasters, but fires break out occasionally in parts of Tucson, such as Mount Lemmon, along with other areas of Arizona, like Prescott.
Journeying back and forth twice a year isn’t cheap. If you plan to fly every time, travel is even less affordable. Since you’re going somewhere warm in the winter, ticket prices will likely be higher than usual. The same goes for when you escape the Arizona heat for the summer.
But even if you’re taking a biannual road trip to and from your winter getaway, there are still significant costs. You’ll need to keep your vehicle gassed up and budget for eating on the road and possibly a hotel if it’s an overnight drive.
There’s also wear and tear to consider for your vehicle. Frequent, long road trips can reduce its shelf life, both under the hood and on the inside (especially if you have kids or pets). Doling out thousands each year in repairs might make those plane tickets more appealing.
You knew this was coming, right? Like with everything, second homes are taxed. Luckily, property taxes might be lower depending on where you settle. For example, Arizona could boast lower costs than much of the country, including neighboring California.
Furnishings and appliances
Owning a second house is great. Owning an empty house…not so much. Once you become a snowbird, you’ll need to make your second house a second home.
This means providing furniture and stocking the kitchen with dishes, silverware, and any appliances you might need. This step alone can run you thousands if you’re not careful.
Since you ideally plan to spend the winter months enjoying the outdoors, you can afford to live more simply than you would at your primary home. Maybe you can skip the big screen TV and get a new fishing pole instead—whatever serves your needs while keeping costs down.
With two houses, you have two sets of utility bills to deal with. When in snowbird land, it’s a smart move to temporarily shut off any utilities, such as electricity, gas, cable, Netflix, and internet.
Heat and air conditioning can be trickier. If you live in the Northeast, Midwest, or any other frigid region, you know that pipes can freeze in the winter if there’s no heat. You’ll either need to keep the heat running or, better yet, have a plumber drain your pipes.
The opposite problem occurs in places with lots of humidity, such as Florida. During the summer months, you may need to run the air conditioning in order to prevent mold.
While you’re hiding away from winter, your house will sit undisturbed for months at a time. This presents a higher risk for something to happen, whether it be a break-in or a flooded basement.
Having someone regularly check on your house is a great idea. If you don’t have someone who can, you may want to consider installing a security system in your primary residence. This provides you with peace of mind so you can enjoy your winter, but also increases your overall costs.
These are just some of the costs associated with buying a second home and taking flight as a snowbird. Be sure to research the particular area where you plan to move to get the specific details you need, and feel free to contact our home loan team to ask any additional questions you may have along with the way. We’re happy to help you transition to a happy snowbird lifestyle.
*Consult your tax advisor