As record number of baby boomers reach retirement age, many are wondering "do I need this much house?". "Downsize" is when you sell your property for a smaller, more easily manageable property. Some retirees find that stairs have become more difficult to navigate with age while others feel that once the kids have moved out, maintaining a big house no longer makes sense.
What About All My Stuff?
There's no doubt that many people feel intimidated by the amount of work it'll take to downsize. After all, they've accumulated a lot of stuff and lived with it for many years. Expunging that stuff can be a daunting and emotional task.
There are many reasons people downsize their home. For example, many Baby Boomers are feeling the urge to downsize from a large home that has served the family so well, because that large space is just ‘too much home’ for empty nesters. Some out-of-state investors have been selling their large single family homes and buying new condos in Kakaako for easier upkeep and less maintenance costs.
People downsize for a variety of reasons. Some people don’t need as much space anymore, others want more time and money to travel or pursue other endeavors, or sometimes, the headaches associated with the cost and physical burden of maintaining a home are just too much.” Getting an expert assessment before making any decisions gives you time to take all the facts and information into consideration, and decide what’s best for you. It allows time to find out how to maximize the value of your home, as well as allowing time to consider where you wish to move, and what the pricing of a new home may be.
Is there a 'Right Time' to Downsize?
It all depends on your individual needs and motivations. If you can wait, the optimal to downsize is in a seller's market (like Oahu right now). Buyers are competing for properties because of the low inventory which increases competition for your home and ultimately it's sale price. Most people looking to downsize aren't in any hurry to move. If this applies to you, use it to your advantage. Talk to your agent about the market trends and carefully review all the options at your disposal before making a decision.
Do Your Homework
But before you start to pack up and make your big move, be sure to do your homework and see if it makes sense for you to downsize.
- Consult with a CPA to understand your tax consequences.
- Consult with a REALTOR and get an estimate on the market value of your house to see how much money is available from the sale of your current house to buy the downsized property.
- Get a handle on fees, put them on a spreadsheet and figure out your costs and proceeds.