Greetings! I trust that this will find you well and in good spirits.
From time to time I have a retired client that decides to downsize their home. In the last year or so I have had several retired clients to make the decision to down size their home and I anticipate the trend will gain momentum. Therefore I researched the topic and have the following information for you on downsizing in retirement. I want to add that you will certainly want to expect for it to take a lengthy period (up to three years) so give yourself plenty of time to accomplish the task completely. You are completing two real estate transactions that are often lengthy, particularly selling a home and are predicated on supply and demand; as well as where home sales are in the business cycle at a given time.
With median prices of existing home sales continuing to show strong year over year growth, there could be an uptick in the residential real estate market during the spring season this year. With this in mind, many retirees may view downsizing as a viable way to deal with a potential recession, economic downturn and/or market correction in the future. After all, selling a home you’ve paid off and buying or building a smaller, less expensive home can give you a cash cushion not to mention reassurance.
Not only can you achieve capital gains on the sale of your home, but maintaining a smaller home could yield cost savings and greater convenience in the future. For example, less square footage and shorter ceiling heights can help you with energy bills. If you’re building a new home, consider incorporating many of the new energy efficient windows, doors, insulation and even solar panel options that are designed to help you save money well beyond the cost of installing these features. And if you look at the
improvements even longer term, green and energy efficient enhancements are the wave of the future, so your property could have greater resale value and a larger market of buyers when it comes time for you or your heirs to sell the home.
When it comes to building, square footage is the biggest driver of price. Many builders will give you a price per square foot, so at $160 per square foot, the difference of 500 square feet can mean a difference of $80,000. Don’t dilute the profit on your present home by building a similarly sized home truly downsize to maximize your savings.
Carefully consider how you live in your home now. Are there rooms you never use? Are you an empty nester with extra bedrooms that never get used, except for the once or twice a year that your children visit? Compare the economics of treating them to a local hotel or bed and breakfast for those infrequent visits versus the cost of installing more bedrooms.
Also, consider repurposing rooms for multiple uses. If you like the idea of a formal dining room but you could really use an office, combine them. Use your current dining table as a desk, credenza to store documents and office supplies and china cabinet for award trophies and plaques. You can still use a lot of the furniture you have now, just think of how you can use it more efficiently in a smaller home.
Open Floor Plan
While an open layout for kitchen, dining and living continues to be a popular trend, consider the disadvantages and a possible contingency plan. For example, if you’d prefer to prepare meals and eat in front of the television, then indulge in an open layout.
However, consider that women of older generations have enjoyed the kitchen as their quiet haven for years away from noisy children and the TV. You may not realize how much you miss it until it’s no longer available. It’s always good to have a second “away room” where you can visit with friends or read quietly apart from the main living area so that you’re not exiled to the bedroom. An away room does not need to be as big as a large second den or living room, and can even be incorporated into an office/dining room or an appealing outdoor space, such as a sunroom or screened porch.
One of the joys of a smaller home is that it’s less time consuming to clean. Therefore, if you don’t really need an extra half bath, don’t build it. The same goes for walk-in closets and pantries. Often the space you stand in would be better used to house the items you’re storing. And remember, if you’re going to downsize your living space, you’ll also need to downsize your possessions — and maybe even your lifestyle. As you evaluate what to eliminate, try to remember the last time you used the items and if you expect to use them again. This is particularly relevant for sports equipment; on the off chance you start playing tennis again, you may want to buy a racquet that’s not 15 years old.
If you have questions about this information or feel that I may be able to help in any way don’t hesitate to call.