Selling the family home in favor of a smaller, simpler dwelling can be motivated by several factors. The most well known is, of course, "empty nest" syndrome. Some downsize due to sudden financial necessity. Still others do so to simplify their lives. Whatever force drives the decision, moving to more modest accommodations -- or a less pricey location -- should be done with a clear understanding of the changes that will take place. Furthermore, the schedule of such a transition should be tethered to a few important realities. How urgent is the change in terms of finances? What does the real estate market look like? Finally, will the equity accumulated be sufficient to purchase a new -- albeit smaller -- dwelling?
It's Just Time
Sometimes, you just know. The kids are gone and you realize you are the oldest people on the block. Moreover, the chores and tasks of managing and maintaining the property are getting to be a burden, physically and emotionally. It is time to find a smaller place. The good news is that you have flexibility, the hardship of household scutwork and landscaping notwithstanding. You can wait for a seller's market, for example. You can continue to build equity by making mortgage payments, that is if the mortgage is not paid off already. You are ready to go yet you do not have to go.
Affordable No Longer
Financial hits come and go. Some pack a wallop. Job losses, medical expenses, divorce and other hardships can leave homeowners in a bind as far as maintaining monthly mortgage remittances and annual property tax burdens. A less expensive place to live beckons sooner rather than later. Although everyone wants to get the best price for a house relative to home value, this scenario leaves the owner relieved if he or she does not end up taking a bath on the sale. In this instance, the seller has little choice but to be flexible.
Still Affordable, but Too Expensive
Then, too, there are times when the owners are not overwhelmed by the budgetary demands of their property but are nevertheless frustrated that they have little left over for college, vacations, retirement etc. Their future nest-egg is woefully modest. Downsizing makes sense yet, as in the first example, waiting might be advantageous. A popular rule of thumb is to keep housing expenses under 30 percent of the total monthly outlays. How long to wait to downsize depends on how much higher than 30 percent the house is costing each month.
Turning Equity into Revenue
A house represents one of the most important investments in a life. Over the decades, owners accrue equity, month after month. Ideally, they end up owning the property free and clear, with equity equal to home value. This represents security for those entering their senior years and downsizing to a smaller home, condo or apartment affords them the long-awaited return on investment. Waiting to get the optimal price for the house is logical. However, owners are well advised to be realistic and reasonable. The longer a house sits on the market, the greater the chance it will be passed over by purchasers who think there is something wrong with it.
Remote Work Allows for Living Elsewhere
As the COVID-19 pandemic has demonstrated, many people are well-equipped and well-suited to working from home. This opens up the doors for such workers to re-plant themselves in more economical locales. Since their income is uninterrupted, they are neither hard-pressed to get out fast nor tethered to corporate headquarters.