Downsizing was once thought of as a rite of passage for empty-nesters and retirees. It was considered the next stage of homeownership after enjoying the big house and puttering in the yard. But everything you thought you knew about downsizing is probably stereotyped and incorrect.
Results of a recent survey that was conducted on behalf of Del Webb, a developer and builder of active adult communities, revealed that a majority of 50-to-60-year-olds are not planning to downsize (pultegroup.com). A majority of the survey’s respondents who are planning a future move indicated that they don’t intend to move into a smaller home.
Many older adults are actually are looking for a larger house! In fact, 71% who plan a future move want a single-family home, and 63% desire a home with three or more bedrooms. These results may be due in part to multi-generational and cohabitation housing trends. Many of the 50-year old’s who took part in the survey indicated they planned to buy a home that can also house their parents.
Jay Mason, vice president of market intelligence for PulteGroup, the nation’s third largest homebuilder and owner of the Del Webb brand, stated in a press release, “Rather than staying put, today’s 50- and 60-year olds are thinking ahead to their next big move. While millennials seem to make the headlines, there are over 140 million Generation X and baby boomers in the United States, many with the means, confidence and desire to stay active in the housing market.”
Mason described a majority of Gen Xers and babyboomer respondents as “looking for a different quality of life when considering their next move.” Of those planning a move, 87% are leaning towards a suburban or rural area. More specifically, 60% described their next home as a “quiet, tranquil place where they can slow down and get some peace.”
Downsizing is a housing trend that is building momentum in younger generations as well. Many home owners who thought of having a large home and yard are rethinking their lifestyles. By reducing the time and costs of maintaining a large home and yard, they are able enhance their daily lives.
A major consideration is that downsizing doesn’t always reduce housing costs. It is possible that the newer condo (or house) you’re considering to purchase may actually cost more than the sale price of your current home. Besides the actual cost of the home, there are also associated costs of homeownership. For example, the property tax of your new home could be more than what you’re currently paying. Additionally, it is likely that your new home may have the additional cost of an HOA or condo fees.
Downsizing also doesn’t mean that you have to buy your next home. A Realtor Magazine news article (More Older Home Owners Choose to Rent; magazine.realtor; January 12, 2016) cites U.S. Census data that indicates half of the home owners aged 55-64 are either staying in their current homes, or deciding to rent instead of purchasing another one.
Are you thinking of downsizing? Downsizing requires planning, not just about where to live but also considering the disposition of your current home. To help you decide if downsizing is in your future, consult with your CPA and/or financial planner to help you understand the costs of downsizing. To understand the current housing market and sale prices in your neighborhood, consult a local realtor.
Dan Krell is a Realtor® with RE/MAX Success in Potomac, MD. You can access more information at DanKrell.com