Thu, 01 Dec 2016,
We are often asked by clients, is this a good time to downsize?
The timing is probably good if you want to take advantage of the heated market we are now in. Will we see prices continuing upward? In my opinion the softening is underway already; Interest rates in the US are set to rise, we are sure to follow suit. The new Mortgage rules have softened pressure a bit as well.
The real question is, on a personal needs level is it time. Most homeowners who at at, or close to the downsizing stage are probably in a home that is way too large, purchased when they had a growing family, or perhaps when their income was at a high level and they were looking for more luxury.
The following are the questions to ask yourself if you are thinking of downsizing:
1) Once the kids start to move out that big home may be just to big. Extra rooms to clean, more space than you need to heat. Maybe there are post secondary educations to pay for. It it's becoming a space, or expense burden, downsizing may be in order. Money can be a top issue.
2) Do you want to start to minimize costs. A bigger home is more costly to maintain, insure, and carrie higher property taxes. Smaller homes are a great way to reduce monthly and yearly payments. You can also find it a benefit in spreading the retirement savings much further.
3) A pretty common reason to downsize is divorce. While not a pleasant phase of life, for many it is a reality. One partner retaining the marital home in a divorce battle can be a costly mistake. Downsizing to a more suitably sized space each is often the best financial decision possible.
4) How much equity do you have in your home? You may be able to bump up your bank account and / or retirement funds by freeing up the equity. Maybe it means being mortgage (and much more worry) free.
5) Do you live in a great school district? Once the kids are gone this is not necessarily a life advantage. What is true is that homes in great school districts usually sell for more money. Take advantage of this bonus equity.
6) Tired of maintaining a larger property? A smaller property requires a lot less upkeep. Not as much grass to cut, not as much snow to shovel, fewer leaves to rake, and more. A condo might also be an answer. You can lock the door and go. If you are looking to travel a lot, this removes a lot of worry.
7) Do you live in an area that is considered more desirable for it's conveniences and attractions. These things might have been important to you once, but perhaps don't have the same appeal or fit your needs as much as they once did. Again, an area that is considered more desirable will fetch a higher re-sale. Another great way yo take full advantage of that extra equity!
8) A change can be as good as a rest. Sure you loved the old area, but everything changes. The same old walls, streets, amenities have become boring. Maybe the demographics have changed, it's become more built up, or traffic has increased. There are many reasons to look for a change of scenery. Moving to a new area where prices are much lower are also a way to add to the bank or retirement account or both. Sometimes you can turn it into a couple of properties instead of one. A primary residence and cottage or a warm winter location. i personally have many clients who want to sell in the GTA and move to Simcoe County.
9) Is there an advantage to moving to another area for reasons such as being closer to grow offspring and / or family members such as grandkids. Maybe you have more time for hobbies or past-times and another location is better suited to this. Tough to kayak in a subdivision, but move lake-side and things change fast!
Coming soon tips for downsizing!