Additional Coverage:
- A baby boomer couple whose home is worth millions doesn’t need to sell. They can retire in the backyard. (newsbreak.com)
Sue and Ken Allen purchased their Palo Alto home in 1975 for a mere $63,000. Today, it’s estimated to be worth between $3 and $4 million. Despite its value, they plan to downsize to a small home in their backyard and rent out the main house.
The Allens are not alone in this decision. Due to the threat of capital gains taxes and higher property taxes, many older homeowners are choosing to stay put. They benefit from Proposition 13, which caps property taxes based on purchase price, resulting in significantly lower taxes compared to new purchases.
In addition to financial reasons, the Allens have strong ties to their neighborhood and support from their community. They prefer to remain there as long as possible, even if it means staying in a home that is larger than they currently need.
However, the Allens are aware of their privilege. They acknowledge that they have benefited from generational wealth through homeownership and have helped their own children with down payments. They also recognize that housing affordability is a major issue, particularly for younger generations.