The kids moved out years ago, you’re tired of shovelling snow, mowing lawns and you rarely use half of the rooms in your house. Why not downsize.
You won’t be alone. Of the retirees who move, many do so for a smaller house, condo, or apartment. One of the chief reasons is cost-cutting. For many baby boomers, the value of their home equity far exceeds their retirement savings. It’s where their wealth is.
Downsizing does require some serious decisions. What area do you move to? Condo, apartment, or smaller home? Making the wrong move will cost. You may even have to move a second time. You need to do your due diligence. Here are several questions you should consider when making your decision.
Where do you go?
Moving to a lower-priced area or smaller home would create savings on both the purchase and property tax. Or perhaps if you move to a more convenient area, closer to family and or amenities you may be able to eliminate the second car. Plus if you ever are unable to drive, you would be close to the things you need.
Condo or single-family home?
Generally, condos are lower priced than single-family homes, plus you don’t have to shovel snow or mow lawns. By moving to a condo you can likely free up some of your equity to invest for a return as well as reduce your utility and maintenance costs.
Buy or rent?
There are a lot of factors to consider here. If you have always owned you may like the idea of buying again. However, consider how long you expect to be living in the new place. If it’s less than 5 years than the cost of selling, that quick will likely exceed any potential gain. And you are probably better renting.
Have a lot of home equity but little in savings?
It may be best to invest the proceeds of a home sale to produce a monthly income. This income combined with the elimination of such expenses as property tax, some utilities, house maintenance will potentially cover most or all of your rent.
Request Your Complimentary Copy of My “Preparing to Downsize” Report
Not only will doing this produce a monthly income for you but depending on what you invest in your portfolio may even appreciate faster than residential real estate. And don’t forget that the equity you receive from the sale of your home is completely tax-free.
Now or later? While many retirees are reluctant to leave their family home, the reality is if you are going to do it sooner is better than later. It’s easier to move in your sixties than it is in your eighties. Plus don’t wait until you are forced to move, due to an unexpected health change. Trying to sell in that situation is chaotic at best.
Do an honest assessment of the pros and cons of staying for a few more years vs selling now. Decide in your situation what makes the most sense for you.
Do you need some help to figure out your next housing step? As an experienced real estate agent who specializes in boomer and senior housing, I would be glad to discuss housing opportunities in the region that might be just perfect for you. I can also offer you some tips about selling your home in today’s market.
Roy Thomas SRES® (Senior’s Real Estate Specialist) is a REALTOR® with Sutton Group Professional Realty. Since 1991, Roy specializes in helping retirees with their later in life real estate transactions. Call Roy at 902-497-3031 or contact Roy here
