Tips for trading up or trading down
After turning 60, a seniorlevel engineer and his teacher wife sat down to map their next decade.
They knew for sure they wanted to sell the dated-looking property where they’d raised their kids. But the tougher decision was about their next house. Should they downsize like so many of their 60-something friends? Or upsize to buy the trophy home they’d always wanted?
“This couple had extremely mixed feelings. They worried that upkeep on a big house would be expensive,” yet they also wanted the luxuries and space of a large house, says Sid Davis, the real estate broker who represented the couple.
Ultimately, they decided to buy a larger house and soon found the perfect place — a sprawling, one-level property with 4,500 square feet of living space and lots of extras.
“Their ideal was to create a mecca that would draw their four grown kids and eight grandkids. And the house they bought fulfilled all their wishes perfectly,” says Davis, the author of “A Survival Guide for Buying a Home.”
Of course, not all buyers heading into retirement can afford to trade up.
“Only about 20 percent of my baby-boom-age buyers are going bigger,” Davis says.
Yet, just as the market for large SUVs is again increasing, so are more people revisiting the idea of owning a larger living space.
Here are a few pointers for buyers: • Systematically think-through your “must have” priorities.
“Ranking your priorities is an absolute key. Ultimately, your best living style is determined by your personal preferences,” Davis says.
If you’re married or living with a partner, Davis recommends you both rank your housing priorities. Then compare notes and if there are differences, strive for compromise.
Though Mark Nash, author of “1001 Tips for Buying & Selling a Home,” is single, he faced his own set of trade-offs a few years back when he decided to sell his 3,200-squarefoot house in an upscale city neighborhood in favor of a 1,000-square-foot condo in a middle-income suburb. He could have moved to a larger home, but his higher priority was to save enough money to also buy a modest, lakeside getaway.
While he did save money, his move to the condo came with sacrifices. Though he liked his neighbors in the complex, he missed the leafy area where his city house was located. He also missed the privacy of a single-family property. As a result, he did a U-turn, selling the condo and buying another detached house.
“The buying decisions you make should focus mostly on functionality and what works for your household,” Nash says. • Challenge your need for a spacious house for parties or house guests.
Like the engineer and his wife, some people seek a large house to host big family gatherings or office parties.
If home-based entertaining is something you value highly and you’re comfortable with the payments on a big property, why not go for it? But if you’re more interested in the financial benefits of living smaller, you may wish to consider less-expensive approaches to hosting friends and family.
As an alternative to homebased entertaining, Mary McCall, a real estate broker and past president of the Council of Residential Specialists (www.crs.com), suggests treating family or friends to a dinner at a restaurant with a private dining space. And if your house is too small for overnight family visits, a nearby hotel could work well.
“Many people worry they’ll someday outlive their retirement savings. They greatly fear taking on a big mortgage. Also, many folks aren’t interested in hosting Uncle Joe or Cousin John when they come to town. They’d rather put them up at the Holiday Inn,” McCall says. • Face reality when it comes to your storage needs.
Davis says some homebuyers like big houses because they place a premium on storage space.
Assuming you can afford it, Davis says buying a large house for extra storage space could be a reasonable plan if it saves you the expense of longterm use of a rented storage unit. But he warns against the notion that you can keep accumulating possessions just because you have a big house.
“Remember that no matter the size of your house, storage space is always finite,” he says. • Don’t delay, whether you plan to buy a small home or a big one.
Obviously, the trend in property values varies widely from one locale to another. In some areas, prices are flat or still drifting downward. But in most neighborhoods, values are continuing to rise in tandem with the economic recovery.
If you’re planning to buy a big house in a popular area with ascending home values, Davis urges you to avoid postponing for long.
“The rates on jumbo mortgages are especially reasonable now. So if you’re determined to move into a larger house, try not to dally,” he says.
To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.