There are direct correlations to home ownership and lifestyle. Whether moving into a larger home by upsizing, or moving into a smaller home by downsizing, a homeowner’s rightsizing decisions intrinsically occur at various stages of life.
During time, the purchase of a larger and better home, is recognized as a natural progression of home ownership and yet, the reasons homeowners choose to upsize vary greatly. While it’s natural to associate a desire to move into a larger home with an increase in family size, other reasons such as financial growth or simply a need for additional space, can also prove to be contributing factors. But, for many would-be upsizers, increased square footage isn’t generally their sole consideration. Those who desire a bigger and better place to live, typically also seek homes possessing features not presently afforded to them in their current home.
Still, homeowners seeking to upsize must remain cognizant of the financial responsibilities encumbered in owning a larger home. In addition to increased mortgage payments, other incrementally higher costs such as maintenance, landscaping and utilities can prove unexpected. Prospective up-sizers may find the budgetary constraints inherent in owning a larger home quickly outweigh the benefits afforded. Bigger, doesn’t necessarily always equate to better.
Purchasing a larger home might require prospective upsizers broaden their search efforts, not only to find a home aligned within their financial thresholds, but a home that also provides the features and amenities they seek. For many prospective upsizers, finding the right home requires they expand their search to neighboring areas, towns or cities they might not have originally considered.
Conversely, downsizing sometimes affords homeowners an opportunity to reduce ownership costs, while providing them with a means of accessing their home’s earned equity. Having the ability to mobilize equity, can help owners reduce or eliminate mortgage responsibilities when purchasing a new home. As such, downsizing oftentimes proves a financially expedient means of achieving retirement.
However, downsizing doesn’t always necessarily equate to a reduction in expenses. Relocating to an area where real estate is at a prime, may result in higher ownership costs. Like upsizers, downsizers have their own considerations to make when determining how much space they’re willing to sacrifice and when coming to terms with the reasons why they’ve chosen to buy a smaller home.
Although downsizers seek smaller properties, they typically also expect their new homes will continue to afford the same luxuries they’ve grown accustomed to. So, downsizers mustn’t inadvertently choose a home failing to meet their expectations or they’re likely to find themselves dissatisfied with their decision and possibly having to move again.
For some, the option of purchasing a condominium or townhouse can prove a worthwhile endeavor. However, other considerations like homeowner’s associations (HOAs) and parking can present new challenges which previously weren’t a concern. But, many homeowners benefit when residing within a communal setting and they may find living within an association serves to complement their lifestyle.
As a word of caution, while downsizing can afford homeowners an opportunity to reduce overhead and potentially help retirees augment their retirement funds, there can be unforeseen tax implications, especially when a home isn’t used as a primary residence. Those who’ve considered downsizing are strongly encouraged to consult with a tax professional before making any decisions potentially impacting their financial position.
Whether seeking to upsize or downsize, the decision to sell an existing home in favor of purchasing another can be complicated. Successful rightsizing efforts demand careful thought and consideration. Prospective right-sizers, must therefore account for how they intend to transition themselves away from their existing home and into a new home better suited to their needs.
There are always financial and logistical considerations that must be made; however, right-sizers who take the time to qualify their expectations are usually better equipped to make informed decisions. Arguably, there are occasions when right-sizers may find it best not to commit to any changes, but those decisions can thoughtfully be based on research and not impulse. Those who’ve taken the time to qualify their search are apt to be more successful in their rightsizing choices than those who didn’t adequately prepare.
Right-sizers are best served in first meeting with a mortgage lender and an experienced real estate professional before advancing their plans to sell their existing home and searching for a new one. Having a preapproved loan, understanding market dynamics and accounting for potential contingencies can help those seeking to transition, become more effective in their rightsizing efforts.
When in doubt, there are alternatives and homeowners may find rightsizing means not moving at all. Choosing to renovate an existing home sometimes affords homeowners an opportunity to make changes serving to transform their current home into a dream home, incorporating the latest options they might’ve otherwise sought to acquire through the purchase of a new home.
Regardless, rightsizing affords owners a chance to own a home which complements their respective needs. Whether investing in the future or accessing capital for retirement, knowing how and when to sell and buy, can enhance a right-sizer’s financial aspirations. It’s important to remember, the right home has the power to positively influence a homeowner’s quality of life.
Sean and Aimee McDonald, Realtors with RE/MAX North Lake Tahoe, can be reached at 775-250-8335 or mcdonaldrealestateteam@gmail.com.