House smart
HOW TO KNOW WHEN DOWNSIZING IS RIGHT FOR YOU
Downsizing to a more manageable footprint can be challenging, especially in a tricky real estate market. Weighing your options carefully before moving down can help you avoid big regrets later, experts say.
For starters, consider if you fit the criteria to benefit most from nest condensing.
“The best candidates to consider downsizing are individuals and couples who have a house that no longer meets their needs. For example, a house with a large upstairs may not be suited for someone with mobility issues, who could benefit from a smaller home on a single level that is easier to get around in and maintain,” says Cara Pierce, financial specialist at ClearPoint Credit Counseling Solutions in Fresno.
Baby boomer or not, anyone who feels he or she is living beyond their means also should consider downsizing.
“The reasons can range from feeling overindulgent with your property’s size to having an empty nest to simply realizing your need to embrace a more frugal lifestyle,” says Samuel DeFranceschi, associate broker at New York-based Nest Seekers International. “Learning to use less and become more efficient and consumer-friendly are all positive actions that can help your wallet (and) the environment.”
The exciting feeling that comes with starting fresh, the ability to make new friends, and the opportunity to declutter your life are other advantages. Before pulling the trigger on downsizing, however, it’s crucial to plan carefully and ponder all the ramifications, especially if you enjoy entertaining, hosting family or have a hobby that takes up a lot of space.
Additionally, although you may be able to save money on reduced utility and maintenance costs in a smaller property, be aware that unloading your home and buying another one involves closing costs and possibly steep taxes, such as capital gains, when you sell your larger home. Also, you could end up paying more in property taxes on your next residence, depending on the area.
Despite these potential financial hesitations, mortgage interest rates remain relatively low and sellers have a lot of leverage in many areas around the country.
For some, downsizing to a smaller single-family home, condo, townhome or other owned property can be more cost-advantageous than renting, especially in markets where rental units are scarce and costly. For others, renting can be a safer bet.