Retiring? Your Home Is Your Biggest Asset: Stay, Sell, or Tap Your Equity

For many California homeowners, the house is the biggest financial asset they own, and retirement is when that fact starts to matter. Older homeowners are sitting on record equity. A report from RiskSpan and the National Reverse Mortgage Lenders Association put equity held by homeowners 62 and older at a record $14.92 trillion in the first quarter of 2026, about 7 percent higher than a year earlier.

I'm Diana Galvez, a REALTOR® with HomeSmart Realty Group's Homeverse Team. Most of my retiring clients ask the same thing: what are my options? There isn't one right answer, so here is how I walk through them.

Option One: Stay Put and Age in Place

This is the most common choice. In a Fannie Mae survey of older homeowners, 56 percent said they would never sell their home. Reasons usually include attachment to the home, a paid-off mortgage, and being near family and neighbors. If you plan to stay, it is worth thinking ahead about the house itself: stairs, bathrooms, lighting, and whether the layout will still work for you in ten years. Small changes now are far cheaper than urgent ones later.

Option Two: Sell and Move Somewhere That Fits

Others decide a different home fits better, whether that is a single-story, a condo with less upkeep, a smaller place closer to family, or a move out of the area. If you sell, the home sale exclusion may let you keep up to $250,000 of gain as a single filer or $500,000 as a married couple filing jointly, if you've owned and lived in the home as your main residence for at least two of the last five years. With Southern California appreciation, many longtime owners are above those numbers, so run your basis with a CPA before you list.

Prop 19: Taking Your Property Tax Base With You

This is the one California homeowners ask about most. Under Proposition 19, homeowners who are 55 or older, severely disabled, or affected by a disaster can transfer the taxable value of their primary residence to a replacement home anywhere in California, as long as they buy or build the new home within two years of selling the old one. You can use this up to three times. If the new home is worth more than the old one, the difference is added to the transferred value. It is not automatic. You file a claim with the county assessor, so confirm the details and deadlines with them or a tax professional before you sell.

Option Three: Stay and Tap Your Equity

If you want to stay but need more income or cash flow, there are a few paths. A home equity loan or line of credit is one. Another is a reverse mortgage, which lets homeowners 62 and older borrow against their equity without monthly mortgage payments. The FHA-insured version, the HECM, has a 2026 limit on the home value used in the calculation of $1,249,125, and what you can actually borrow depends on your age, interest rates, and payout choice. These products have real costs and trade-offs, including what it means for your heirs, so speak with a HUD-approved counselor and a qualified advisor before deciding. Fannie Mae's research found only about 15 percent of older homeowners would consider tapping equity for retirement income, so many people prefer to avoid it.

Option Four: Add an ADU

For some owners, adding an accessory dwelling unit makes sense, whether for a caregiver, a family member, or rental income. California's ADU laws make this easier than it used to be, and in my home market of Long Beach, the city reports more than 400 ADUs built per year. Costs vary widely, with published estimates running from roughly $150,000 to $400,000 depending on size and site, plus permit and impact fees. Get written bids and a fee estimate from the city before you commit, and talk to a tax professional about how rental income and property taxes would be affected.

If You Do Decide to Sell, Don't Wait Too Long

Selling a home you've lived in for decades is a big project. There is a lot to sort through, including repairs, clearing out belongings, and disclosures. Research reported in 2026 from Boston College's Center for Retirement Research suggested that sellers who wait until their 70s and 80s may net lower prices, though I'd treat that as one study rather than a rule. The practical lesson I see is simple: selling on your own timeline, rather than in response to a health event or a crisis, almost always gives you more options and better results.

If you're thinking about retirement and wondering what your home means for your plans, let's start with a no-pressure conversation. I can give you a realistic picture of your home's value, what selling would look like, and how the options above fit your situation.

You can reach me at (323) 807-4184 or casasbydianag@gmail.com. Let's make a plan that works for the next chapter.

Diana Galvez, REALTOR®
Homeverse Team, HomeSmart Realty Group | DRE #02040313
Serving Long Beach, and the greater Los Angeles & Orange County area

This post is general information, not tax, legal, or financial advice. Please consult a licensed CPA, attorney, or financial advisor about your situation.