Should I Sell My Home and Downsize?
Hey, Dave Edwards, Treasure Valley Dave in Nampa, Idaho. Here’s an interesting question: “Should I sell my home and downsize?” What’s going on with the market and everything? Is this the right time? What’s going on in your life that makes it the right time? So, let’s get right into this.
If you’re like me, it seems like I get just a little bit older every day. My needs change slightly, and maybe the same goes for you. Things become somewhat more pronounced as you age — like I will one day.
Baby Boomers on the Market
I was reading this Washington Post article, and it had some ideas that I wanted to share with you.
“Baby boomers are buying up all the houses.” Well, is that true? And is it wrong? What does it mean? This year, the median age for a repeat buyer was 58 years old, according to data released on Monday from the National Association of Realtors (NAR).
They start with Rick and Laura. They were living in a place on a lot of land, a big old house. Then, they discovered that a more manageable one-story house closer to the family might be just the thing for them. And because they’ve been in their current house for so long, they sit on top of the natural price inflation of homes. After a while, they’ve got a lot of money in their house. Now, they can buy their next home and not have a mortgage payment.
Older Home Buyers' Advantage
These people are not alone. The Zinnicks and older buyers are prevailing in America’s hot housing market. A new picture is emerging of the buyers who still find a way to get a house. They’re older, and because many have sold a home, they are wealthier.
Well, that means they have equity when it comes time to buy their next home. Now, maybe it’s enough to buy a whole new home with all cash and not have a payment. Or perhaps it’s enough to put down a substantial down payment. Either way, that’s a good thing. We’ll talk about that more.
So, there is less competition going on right now. It’s certainly different than it was just a couple of years ago. But someone with much equity can prevail if there is a multi-offer situation or an all-cash offer. After all, the seller wants someone who can make it to the finish line.
More importantly, older buyers are likely to be selling a house. That’s where they will be getting most of that equity from.
Sellers often go with a more attractive offer, so a larger down payment would look more appealing to a seller or they might go in all cash. But it’s only that big of a deal if the house is a real dog, and it can only sell with all cash.
Selling and Right-Sizing
But you know what? Let’s say that you are right-sizing, so you’ll also be a seller. A lot of this stuff will apply to you. You want someone who’s very sound when it comes time to put in an offer on your house that you would accept.
Why Older People Are Buying Homes
This other agent in the article says that she focuses on helping older buyers and is often scouring for one-story houses. That becomes important because we all get a little older and leave our glasses on the other floor from wherever we are. And she’s also looking for her downsizing buyers who are not ready to move into assisted living centers or senior apartments.
Those quick places are great, but if you can still have the freedom to choose where you’ll live, that’s a great thing going on. This agent has said there can still be a clear advantage for older buyers who have built up wealth and income over the decades. In short, they usually routinely emerge at the top of the pack.
When they’re competing with first-time home buyers, that’s what this article says is the competition. It appears to sellers that the downsizing buyer is more stable and more likely to complete the purchase. And that’s huge.
First-Time Home Buyers
As I said, when you go to sell your house, it often leaves seniors and aspiring first-time home buyers competing for very similar dwellings. Still, it’s not always the case.
There are a lot of first-time home buyers who are looking for more square footage and a bigger yard. Often, that means a two-story house and a regular subdivision.
Now, don’t feel too bad for the first-time home buyers. There are a lot of programs out there, particularly with builders who are offering a lot of money to help buy down rates to get people into these first-time home buyer types of houses. So, that’s a great thing.
Is It Time to Downsize?
Let’s talk about a couple of other things. If — and I say if — this is the right time for you to downsize or find the right house that fits your current lifestyle, you’re in excellent luck. And why is that?
Well, house prices are down from their peak within the last year or two years or so. Higher interest rates are doing what the government wanted them to do: put pressure on prices that come down. They are not screaming hot deals like they were ten years ago, but the prices not right at the peak like they were a couple of years ago.
Higher interest rates will be a minor deal for most people who are downsizing because they will be coming in with cash. A third of all the purchases now are mostly cash. And guess what? High interest rates due to purchases that are all cash are not a thing.
Conversely, maybe you’re just making a substantial down payment and your mortgage is smaller. The smaller your mortgage, the more money you’re putting down, the less the interest rates will bother you. Plus, you can always refinance later.
With the VA loan, you can refinance later for a small fee with no new appraisal or income verification. If you qualify for that, it might be something to check out.
Why Sell a Home and Buy a Smaller One
Another great thing is that there are not a lot of existing homes on the market today. You could get a decent price for the house you’re selling.
We have a lot of inventory for new homes because builders are just building as much as they can right now. But some people want something other than a brand-new construction. They like a house that’s been lived in. They like an established neighborhood. Perhaps they even like established landscaping, or it’s close to where they need to be.
Also, you’re not getting any younger, so it’s time to uncomplicate your life, do less work around the house, and stop climbing the stairs so much.
Am I Ready to Downsize My Home?
If you want to explore this subject, we have this great 24-page full-colored magazine that you can download for free now.
“Am I ready to downsize my home?” It goes through some great questions you might have yet to consider, like a safer environment. I’m not saying that the house you raised your family in has turned into gang town or something, although it’s entirely possible, depending on where you are. But a safer environment might be a house that’s one-story or doesn’t have steep hills in the yard.
Also, when it comes to downsizing, there’s a significant emotional component. This can cover many things, but not having to take care of a more extensive property can be a relief, a burden off your shoulders. We’re also going through the process of decluttering, making decisions on what stuff you’ve been holding onto for a long, long time that may be time to let go. A smaller place will force you to declutter your house and mind and give you a new sense of freedom.
Money is a big thing. We talked a little bit about that, but this magazine here goes into a profound dive into all various aspects of money and a lot of stuff you might have yet to think of. There’s a couple in there that fit in that category.
Also, now that you’re retired or retiring or have learned how to work remotely, it’s time to think outside the box. Living in a different place may be feasible, especially if you need to be near an airport or family.
How to Downsize Correctly
So, how small should you go? Well, if you’ve heard of Tiny Homes, we’ve had clients who went from a massive place with years and years of memories to a tiny home. They enjoyed it because they could focus on what’s important: being with each other.
I’m not saying a tiny home is for everybody or this incredible couple will live in one for the rest of their lives. But for right now, that’s what they needed, and they were just absolutely thrilled to get it. So, that could be you.
It's Time to Downsize!
It’s not just me throwing this out there — it’s the Washington Post. It might be the best time to downsize that you’ll see in a long time.
When it comes time to sell a home, buy a home, or even relocate to the Treasure Valley, your Treasure Valley Dave team is your real estate expert by your side, helping you get home. Contact us to learn more about downsizing today!