Moving into a smaller home may feel like a step down, but it has a few upsides: saving money, saving time, and having less clutter in your life. According to a 2018 study by Fannie Mae, it is predicted that there will be a 42% increase in the number of older Americans exiting home ownership between 2020 and 2036.
So how do you know if it is a good time to downsize?
Here are some important considerations before you take those next steps:
Current Home Equity
Home equity provides you with a measure of financial freedom and most folks have a big share of their net worth’s tied up in their homes. According to U.S. census data from 2013, home equity composed 66% of the net worth’s of people between the ages of 65 and 69. If you’re an older adult with substantial equity in your home, it’s sensible to be deliberate about the role home equity will play in your plan.
Retirement generally means moving over to a fixed income, and that can seem intimidating. In fact, 42% of Americans say they plan to downsize in retirement, according to a survey by TD Ameritrade. Downsizing is both a financial as well as an emotional decision, so rather than going deeper into debt, you can often leverage the value of your home to address future retirement needs.
It is important to make sure you’re always aware of market conditions—both where you’re planning to sell and hoping to buy.
“Is it the right time to downsize?” is just like asking the question “Is it the right time to sell?” – with a few added complexities. Not only are you going to want to be aware of current market conditions, but you’re going to need to take a deep dive into the personal component of home selling.
So how much does it cost to move these days? Well, there are many factors to consider. Moving can be expensive, even if you’re downsizing, and there are always additional costs associated with both buying and selling homes. While there’s no way to get around these facts, it will help if you go into your move with some advice from your local lender to ensure that are no surprises!
Want to take to a professional? Call or message us today and we can look at your specific situation.
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Written by Kelsey Chisholm