How to determine if it’s time to downsize
Individuals work hard to save enough money to purchase their homes. And the hard work doesn’t end there. Once homeowners settle into a new home, they may set their sights on renovations that suit their individual needs. And even when buyers find a home that needs no such work, maintenance requires homeowners’ utmost attention.
All that hard work is perhaps one reason why seniors may be a little reluctant to downsize as they advance through their golden years. In addition to the sweat equity homeowners put into their homes, all the memories they’ve made within their walls can make it harder to put a home on the market.
Downsizing is a difficult decision that’s unique to each homeowner. Seniors who aren’t quite certain if downsizing is right for them can consider three key factors to make a decision that’s in their best interests.
“The majority of my clients who are downsizing their kids are off to college or are moving out of the house. It is a really good time in the market to make money off the sale of the house. And time to find another home whether it be here or in another state,” Re/Max Community Owner Rick Mauriello said
“It is a matter of preference. In this particular market, if you are a seller there really has not been a better time to proceed with that. The hold up has become due to a lack of inventory. There has not been a lot of options,” Crowley & Carr Real Estate Owner/Broker Philip Carr said.
“It is a personal choice. Sometimes people hang on longer. Some people sell when their kids are out of school that’s it,” Joanne Murphy, a relator with Keller Williams Atlantic Shore, said.
Carr offered his opinion on what the optimal scenario for selling your primary home.
“Best case scenario is if they have a second home, or a relative or a rental lined up,” Carr said.
• Cost: Perhaps no variable affects senior homeowners’ decisions to downsize their homes as much as cost. No one wants to outlive their money, and downsizing to a smaller home can help seniors reduce their monthly expenses by a significant margin. Even homeowners who have long since paid off their mortgages can save substantial amounts of money by downsizing to a smaller home or even an apartment or condominium. Lower property taxes, reduced insurance premiums and the need to pay for fewer repairs are just some of the ways downsizing can save seniors money.
“Buyers look at everything. People still like to have their space. Cost still comes into it. There are no deals. Square footage is the most important factor,” Mauriello said.
• Space: Many people love the extra space that single-family homes provide. But seniors can take a walk through their homes and see how many rooms they still use on a consistent basis. If much of the home is unused, seniors can probably downsize without adversely affecting their daily lives.
• Market: The real estate market is another factor to consider when deciding if the time is right to downsize. A seller’s market can help seniors get the biggest return on their real estate investment, potentially helping them make up for meager retirement savings. For example, home prices skyrocketed across the country during the COVID-19 pandemic, making that a great time for sellers to put their homes on the market. Seniors selling to downsize may capitalize on such spikes since they won’t be looking to turn around and buy larger, equally expensive homes once they sell their current place. If the market is down and seniors can withstand the work and cost a little longer, it may be best to wait until things bounce back in sellers’ favor.
Downsizing requires careful consideration of a host of variables. No two situations are the same, so seniors should exercise due diligence to determine if downsizing is right for them.
“You have to start getting rid of things sooner than later. Don’t wait until you are ready to downsize to try and get rid of everything,” Murphy said.