Over the years, we’ve worked hard to save enough money to purchase our homes, but the hard work doesn’t end there. Once we settle into a new home, we often set our sights on renovations that suit our family’s individual needs. And even when we find a home that needs no such work, maintenance requires our utmost attention.
All that hard work is perhaps one reason why we may be a little reluctant to downsize as we advance through our golden years. In addition to the sweat equity we put into our homes, all the memories made within the walls can make it harder to put a home on the market. However, sometimes we simply don’t need the space anymore. And while the memories and maintenance are definite factors to consider, we still don’t know if it makes sense to downsize, especially now.
Downsizing is a difficult decision that’s unique to each of us. If you aren’t quite certain if downsizing is right for you, consider these three key factors to make a decision that’s in your best interests.
Cost
Perhaps no variable affects your decision to downsize your home as much as cost. No one wants to outlive their money, and downsizing to a smaller home can help you reduce your monthly expenses by a significant margin. Even those of us who have long since paid off our 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 you money.
Space
Many people love the extra space that single-family homes provide, but we often can take a walk through of our homes and see how many rooms we still use on a consistent basis. If much of the home is unused, you can probably downsize without adversely affecting your daily life.
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 you get the biggest return on your real estate investment, potentially helping you 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. Selling to downsize may capitalize on such spikes since you won’t be looking to turn around and buy larger, equally expensive homes once you sell your current place. If the market is down and you can withstand the work and cost a little longer, it may be best to wait until things bounce back in your favor.
Downsizing requires careful consideration of a host of variables. No two situations are the same, so exercise due diligence to determine if downsizing is right for you.