Downsizing has long been a popular option when homeowners reach retirement age. But there are plenty of other life changes that could make downsizing worthwhile. Homeowners who have experienced a change in their lives or no longer feel like their house fits their needs may benefit from downsizing too. U.S. News explains:
“Downsizing is somewhat common among older people and retirees who no longer have children living at home. But these days, younger people are also looking to downsize to save money on housing . . .”
And when inflation has made most things significantly more expensive, saving money where you can has a lot of appeal. So, if you’re thinking about ways to budget differently, it could be worthwhile to take your home into consideration.
When you think about cutting down on your spending, odds are you think of frequent purchases, like groceries and other goods. But when you downsize your house, you often end up downsizing the bills that come with it, like your mortgage payment, energy costs, and maintenance requirements. Realtor.comshares:
“A smaller home typically means lower bills and less upkeep. Then there’s the potential windfall that comes from selling your larger home and buying something smaller.”
That windfall is thanks to your home equity. If you’ve been in your house for a while, odds are you’ve developed a considerable amount of equity. Your home equity is an asset you can use to help you buy a home that better suits your needs today.
And when you’re ready to make a move, your team of real estate experts will be your guides through every step of the process. That includes setting the right price for your house when you sell, finding the best location and size for your next home, and understanding what you can afford at today’s mortgage rate.
What This Means for You
If you’re thinking about downsizing, ask yourself these questions:
Do the original reasons I bought my current house still stand, or have my needs changed since then?
Do I really need and want the space I have right now, or could somewhere smaller be a better fit?
What are my housing expenses right now, and how much do I want to try to save by downsizing?
Once you know the answers to these questions, meet with a real estate advisor to get an answer to this one: What are my options in the market right now? A local housing market professional can walk you through how much equity you have in your house and how it positions you to win when you downsize.
If you’re looking to save money, downsizing your home could be a great help toward your goal. Talk with a real estate agent about your goals in the housing market this year.
In the United States, there are over 72 million millennials. If you’re part of that generation and have thought about buying a home, you aren’t alone. According to Zonda, 98% of millennials want to become a homeowner at some point if they aren’t already. But why? There are plenty of reasons you may choose to become a homeowner. Here’s why other millennials have made that decision (see graph below):
This graph shows why millennials are buying homes according to Zonda’s 6th annual millennial survey. The top reasons include building equity, a change in life stage, wanting stability, rising home values, and wanting to make somewhere truly their own. Here’s a look at each in more detail.
Building equity – Homeownership is a long-term investment that allows you to build wealth, increase your net worth, and become more financially stable. Beyond that, the alternative to owning a home is typically renting. With the way rents have risen so dramatically over time, it may make sense to build your own equity instead of the equity of the person you’re renting from.
A change in life stage – As a millennial, you’re reaching your prime homebuying years. That means you may be at the point where you need more space or a different location.
Stability or settling down – This could mean establishing your career or just generally deciding more concretely what you want your life to look and feel like. As that idea becomes clearer, you may want to establish that lifestyle in a particular place and put down roots.
Rising home values – By purchasing a home, you own an asset that traditionally increases in value over time. That can mean your home will have a higher resale value if you decide to move again.
Wanting to make somewhere “mine” – Owning a home gives a sense of freedom because you can customize it however you want, make updates as you see fit, and be yourself in a place that’s solely your own.
Throughout Women’s History Month, we reflect on the impact women have in our lives, and that includes impact on the housing market. In fact, since at least 1981, single women have bought more homes than single men each year, and they make up 17% of all households.
Why Is Homeownership So Important to Women?
The rise in women pursuing homeownership hasn’t just made an impact on the housing market. It’s also been an asset for those buyers and their households. That’s because homeownership has many benefits, both financial and personal.
On the financial side, housing proves to be the key to building wealth for single women. Ksenia Potapov, Economist at First American, says:
“For single women, housing has always made up a large share of total assets. Over the last 30 years, the average single woman’s wealth has increased 88% on an inflation-adjusted basis, from just over $142,000 in 1989 to $267,000 in 2019, andhousing has remained the single largest component of their wealth.”
The financial security and independence homeownership provides can be life changing, too. And when you factor in the personal motivations behind buying a home, that impact becomes even clearer.
A recent report from the National Association of Realtors (NAR) shares the top reasons single women are buying a home right now (see chart below):
During the pandemic, many of us reexamined the meaning of home for ourselves and our loved ones. Today, that can be seen in the recent rise in multigenerational households. According to Jessica Lautz, Deputy Chief Economist and Vice President of Economic Research at the National Association of Realtors (NAR):
“Multi-generational buying may be a home where families live in the same home with elderly parents, children who have boomeranged back home, or other extended family members. While this is not a new concept of living, it is one which has gained recent popularity.”
And citing data from Pew Research Center, the Wall Street Journal (WSJ) says:
“. . . multigenerational living has made a comeback in recent years, particularly after the 2008 financial crisis and during the pandemic.”
So, if buying a multigenerational home has crossed your mind, you aren’t alone. Depending on what stage of homeownership you’re in, there are different reasons it could be the right fit. The chart below shows responses to a recent survey from NAR about the reasons people have bought a multigenerational home:
Whether your motives are financial or focused on the people you’ll share your home with, a multigenerational home has distinct advantages. It can make homeownership more affordable, and it can help you best support your loved ones. As Lautz explains:
“Multi-generational home buying is a way for families to care for one another, support one another, and often buy a home that may have been previously out of reach. . . . The trend of multigenerational buying appears to be firmly established and one that could expand in the future.”
Many people are reaching the point in their lives when they need to decide where they want to live when they retire. If you’re a homeowner approaching this stage, you have several options to explore. Jessica Lautz, Deputy Chief Economist and Vice President of Research at the National Association of Realtors (NAR), says: (more…)
As we celebrate Black History Month, we reflect on the past and present experiences of Black Americans. This includes the path toward investing in a home of their own. And while equitable access to housing has come a long way, homeownership can be a steeper climb for households of color. It’s an important experience to talk about, along with how it can make all the difference for diverse homebuyers to work with the right real estate experts. (more…)