Is Downsizing Always The Best Choice?
Other than when work enforces a move, I guess that we can break down three key times in our lives when we are most likely to buy a home.
The first, obviously enough, is when we're looking to become first time buyers and start climbing the home ownership ladder.
Typically, the next phase in life that often causes us to consider a move is when we start a family and that neat little condo suddenly seems far too small.
The third most common phase is arguably the one that creates the biggest dilemma - downsizing.
Perhaps we should first consider that the term "downsize" can mean different things.
For some people, finding a smaller home can be a matter of simple economics. In that situation, it is usually the only viable option.
But perhaps the most common time that downsizing enters our thought process is when the kids have all moved out and retirement is looming.
There are so many attractions to downsizing, from reducing the amount of living space we have to maintain as we get older, to cutting living expenses in our later years, to moving to a more desirable area. It's also quite common for retirees to decide to explore the country and purchase an RV and move into a smaller home and use equity from the sale of a larger property to help finance the traveling.
All that being said, however, downsizing is not on everyone’s radar. A Nielsen study in 2015 established that nearly half of all people envisaging a move when they retire instead plan to increase the size of their home or to upgrade to a better specified/located home that's the same size as their current residence!
But the decision to downsize is rarely an easy one, simply because there are so many dynamics involved in what is often a difficult choice requiring a good deal of compromise.
One of the most challenging aspects can be the emotional aspect of moving out of a much loved home that's just becoming too much to manage as the years roll by. This is something that cannot be measured in financial terms and will vary in intensity and necessity from person to person. That said, if it makes economic and/or practical sense then that is often the deciding factor, even though the move will be really tough.
I think it's probably true that many of us like to live in even larger properties in our most active and highest earning years. And while all those rooms and extensive grounds seem so appealing at that stage, they can become a huge problem as the realities of getting older gradually impose themselves.
I therefore believe that downsizing should be part of a long term plan, rather than something we only face when, for example, retirement actually arrives. This enables us to look at our future through a much sharper lens and to make property purchasing decisions that can scale better as life changes. In other words, do we really need seven bedrooms and a huge square footage from a practical standpoint?
This sort of focus really does have the potential to equip us to make smarter buying decisions much earlier than when downsizing is typically contemplated. Do you want a huge house in a decent area, or would you actually be better off in the long run in a home of more modest proportions in a truly wonderful location? Make the right choice there and downsizing may never be something you need to think about.
Fortunately, we have huge experience in helping people to move to a home that better fits their life circumstances, so please don't hesitate to reach out to us for an informal discussion of the best options in your case.