• The housing market in our area has rebounded quite nicely from the recession with the value of many homes climbing in recent years. Cashing in on some of that equity appreciation may help provide retirement income and extend the life of your nest egg. For more information on the propriety of such a move, please first consult with your financial advisor.
• A smaller home may mean a smaller mortgage payment each month if you are still paying off an existing loan. Or it might mean paying off your mortgage entirely and being debt free on your new home. Additionally, downsizing may lower your property taxes, energy costs, property insurance and ongoing maintenance and repair expenses depending upon the choices you make.
• According to the Center for Retirement Research at Boston College (CRR), housing costs (including utilities, taxes and upkeep), represent one of the biggest expenses for a retired couple – 30 percent of expenses for a couple aged 65-74. That’s money that can be spent on other things in retirement.
• For example, CRR estimates that a couple downsizing from a $375,000 home to a $250,000 home may be able to cut their annual expenses and increase their annual income from savings by a combined $7,260. CRR provides a calculator that may enable you to determine your own savings here. As always, it’s a good idea to consult with your financial advisor before making any decisions.
• Some homeowners are reluctant to trade a house for a condominium or town house because of concerns regarding the financial impact of homeowners’ association fees. While such fees can change one’s monthly budget, keep in mind that you may be paying similar expenses as a homeowner in the form of maintenance and upkeep costs.
• While a smaller home may mean less space, it could also mean less time and aggravation spent on keeping up a big house. Without all the work that goes into keeping up a bigger home, you may actually find a lot more time to enjoy traveling, hanging out with friends, picking up new hobbies and, generally, having more fun!
• Moving from a suburban home to an apartment or condo building in a downtown area with amenities on site may open up a whole new world for retirees. Those who have made the switch often find that they now can enjoy more trips to the theater, nightclubs, restaurants, shopping, as well as taking advantage of fitness centers and other on-site activities.

According to the Wall Street Journal, it can pay to downsize sooner rather than later for those approaching retirement or already retired. The financial benefits can add up over time. Additionally, as we get older, moving gets harder thus it may make a lot of sense to move now rather than waiting.

If I can help answer any of your questions about downsizing, please give me a call or e-mail me today. I’d be happy to discuss the pros and cons of making a move and help you decide if downsizing is right for you.

• Choose your location carefully. Most vacation homebuyers should choose a location that offers the greatest number of amenities and benefits that fit with their interests, whether it’s a beach resort, a ski area, or a place to play golf. If you want your friends and family to enjoy it with you, you may want it to choose a place that is conveniently located for all of the people you want to use that home. As wonderful as Hawaii might be, jumping on a plane for five hours may be a physical or financial challenge for some people. That’s perhaps one reason why buyers in NAR’s® vacation home survey bought a property that was a median distance of 200 miles from their main home.
• Visit the destination multiple times before buying. Before purchasing in any particular area, you may want to consider staying in local accommodations or possibly renting a home in your preferred area at various times of the year and hopefully for extended periods of time so as to get a better sense of the locale. You should make sure that you won’t get bored with the location of your second home. Some people buy a vacation property with the ultimate intent of using it as their retirement home. Thus, it is important to think about how the location will fit into your short and long term plans and to consult with your financial planner as to the best means of achieving those goals.
• Be realistic about costs and how often you will use the second home. Just like a primary residence, there are far more costs to owning a vacation home than the down payment and the mortgage. Property taxes, local assessment districts, homeowners’ association fees and costs, maintenance costs and utilities can add up quickly. It is also important to factor in how often you are likely to use the home as compared to the cost of ownership.
• Buying with an eye to renting. NAR® statistics show that approximately one out of every four vacation homebuyers plan to rent out their properties at least occasionally, but there are potential drawbacks to renting to strangers There are no assurances that vacation homes can be successfully rented and some jurisdictions (as well as some common interest developments) limit the ability of homeowners to rent their properties to others on either a short term or long term basis. It is best to do your homework and consult with your legal, tax and insurance advisors before buying any property that you may want to use for any type of rental purposes.
• Get help from a professional REALTOR®. With mortgage interest rates still historically low and the housing market bouncing back, this may be a good time to buy a vacation home. But finding the right property at the right price that meets your needs can be a challenge. It’s important to work with an experienced real estate professional who understands the particular market you’re considering, as well as vacation home purchases in general. With the assistance of a knowledgeable REALTOR®, I know you’ll be able to find that special vacation home that you and your family can enjoy for many years to come. Let me know if I can help!