Downsizing: Is it Time?

downsizing

Downsizing: Is it Time?

A Guide to Determining Your Needs.

Knowing when it is time to downsize is a very personal and often agonizing decision for many people. Is your life the same as it was for the past 10, 20 or 30 years? Likely not. A common consideration for those in the 55+ age bracket is to examine whether your current home should really be your ‘forever’ home. Perhaps you chose your current home due to its proximity to your job, conveniences, a good school district or as a status symbol to reflect your financial success. Whatever reasoning that led you to originally purchase your larger home, inevitably, life changes, and with it our needs. Perhaps the kids have moved out and/or you are considering retirement options. Changes in lifestyle such as these can make examining your needs, and considering the potential of finding a smaller home, the new ideal.

CONSIDERATIONS FOR DOWNSIZING

1. Have you recently gone through a separation or divorce?
This is a situation that no one plans for, but is one of the most common reasons for people to downsize. While one partner may elect to stay in the marital home, more often than not, it ends up needing to be sold and both parties transition to a smaller home, townhouse or condo. This is a very stressful and emotional time for all concerned, requiring some challenging choices to be made concerning real estate. If one party wishes to remain, the remaining spouse may require an equity pay out. For economic reasons, keeping the marital home can be a big mistake that can lead to more difficulties and challenges moving forward. This heart wrenching situation is fraught with agonizing emotional hurdles and hanging on at all costs can be a big mistake. This situation requires the most thought.

2. Have your children moved out or gone off to college?
If the kids have moved out, do you still need all that extra space? While a 3-5 bedroom home may have been a necessity with a growing family, now that there is only you or you and your partner remaining in the home, think about all the extra heating/air conditioning you are paying each year, as well as higher taxes on a large property. Is it really worth it to pay for the ongoing up keep on a large floor plan or maintenance of a large property. Perhaps now is the time to free up some hard earned dollars to put toward travel and adventure instead of paying to hang on to extra unused rooms.

3. Are you currently located in a good school district?
Living in a good school district makes great sense while you are raising a family, but along with such neighbourhoods, often you will be paying higher property tax. If the kids are gone, ask yourself if it is still the smartest place for you to be. Do you really want to continue paying higher property tax for a perk you don’t really need anymore? Since taxes are higher likely your home value is better as well. Selling to move to a location where school district is no longer a concern can be another great financial consideration. You may also want to be in an area that is quieter than a young family neighbourhood. There are many adult style neighbourhoods that are very popular with empty nesters and early retirees.

4. Is your current neighbourhood located in a sought-after area?
Perhaps your home was in an affordable area when you purchased, but over time has become more and more desirable due to surrounding development and access to major transportation routes, shopping, schools etc. If escalating home values in your area are putting upward pressure on your tax base, you could likely sell at a good profit due to the increased popularity your neighbourhood has gained, and associated demand in the marketplace.

5. Would you like to reduce your living expenses?
Smaller homes cost less to maintain, which will allow fixed income retirement funds or a single vs. double income to stretch a lot further. The expense of insurance, property tax, heat and hydro all cost a lot more in a larger home. This could be the motivating factor in determining if the time is right for you to downsize.

6. Is maintaining your property becoming a burden physically or financially?
If you decide that the maintenance of a large home and/or property is getting to be a bit too much for you as you age, you could consider hiring someone to take care of the landscaping,
cleaning, renovating and repair work required. This is one option. However, an easier option would be to reduce the time required to focus on these issues by considering a condo, where exterior maintenance is taken care of for you; thereby freeing up a lot of your time. If you still want control over these things then a smaller home or townhouse could be the practical solution. Either way, if you want time and funds to divert to travel, these are excellent options. Physical limitations or failing health can make it impossible to continue in a living situation that is no longer practical. Most common is the need to move from a 2-story or multi-story dwelling to a smaller bungalow for the ease and convenience of having all of your day to day needs met with single level living. Would a condo apartment with built in amenities such as shopping, exercise, spa facilities be more appealing or a bungalow close to shopping and health care services? Perhaps even a seniors assisted living facility is the right choice when it comes to optimal conditions for your health situation.

7. Would you like a change of location?
Are our cold winters here in Canada a source of distress for you? The thought of shoveling snow and chopping ice just to get to the market can make you long for warmer climates. Many
retirees in Canada consider the Snowbird lifestyle as a pleasant way to spend their golden years. There are many options for purchasing properties in warmer climates. Downsizing to a smaller
home or condo and also purchasing a get-away home in another country may be a lifelong dream or a new idea for you. Suddenly that gorgeous over-sized home can start to feel like a
weight you want to relieve yourself of, even if it is desirable and the envy of your friends and family. It is fine to want something different for a different life stage. Has a recent vacation to a
warmer climate inspired you to finally make that move? Now, may finally be the time.

8. Are you in a good equity position with your current home?
Once your home is paid off, you will have equity. Many people are using the equity from their larger family home to supplement or fund their retirement. This may be a serious consideration for you if selling your larger home would allow you to move to a more modest home in a less expensive area and still have a comfortable amount of money left. It may be worth checking with your local Real Estate Salesperson to determine what the current market value of your home is. If your home is paid off, or if you have a considerable amount of equity in your home, you may be able to sell, buy a smaller house in a cheaper area, and still have a size-able amount of money left over. If you already have a retirement income, the proceeds could be used either to finance a more modest home, a recreational property, a boat, travel, or whatever you wish. Letting go of the larger home may provide you with the financial freedom you need.

9. Do you need to be in another area?
Perhaps your kids have now begun to raise families of their own. Would you like to be closer to the grand children? If the kids have moved to another town or city to pursue employment and you want to keep family close, it would make holiday and special occasion get togethers much more convenient if you were to move closer.

10. Aging in Place.
While thoughts around downsizing may lead to the sale of your current home, sometimes, your home is already a good size but you need to free up some capital. There are options for remaining in your home and freeing up funds with a Reverse Mortgage. This option is gaining in popularity with our ageing population and could be a better solution for you, where moving is not the right decision for you at this time. This is a common way to free up equity to help with retirement funding. There are pros and cons to this type of loan however, and it’s best to speak with your mortgage professional to determine what is right for you.

How to Start the Downsizing Process

Once you have determined to make your life transition and downsize you will need to do
carefully consider many issues such as the following:

1. Review your current needs. Will you need a 2 car garage, yard maintenance equipment
or a formal dining room in your next dwelling? Is it getting harder to navigate stairs?

2. Walk through your home and consider everything you can let go of. Does the word
‘hoarder’ come to mind with some of the unnecessary ‘stuff ’ you have been hanging onto?
Adopting a minimalist attitude is a must if you will be moving to a smaller living space.

3 .One of the essential elements toward downsizing is sorting your things into Keep,
Donate, Sell and Toss categories. Sell items you will not be taking with you but that others could
benefit from. This can be handled via yard sale, garage sale or selling online.

4. Be strict with yourself. If you have not used something in the past 6-12 months, as
yourself if you really need it. Consider swapping out over-sized furniture for smaller pieces.

5. Be sure to take measurements at your new home to ensure everything you are taking with
you will fit into the new space.

6. Try not to get overwhelmed and work through the process room by room.

7. Contact a Real Estate Sales Representative who specializes in Estates and Downsizing to
help you with your transitional needs.

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Laurel Amey is a Sales Representative with RealtySource Inc. Brokerage in Kingston, Ontario. She has 25+ years as a sales professional and has been a licensed Realtor® since 2007. Recently Laurel is a Seniors Real Estate Specialist (SRES®) and is pleased to offer her services to seniors and their families for their downsizing needs as well as for anyone requiring estate services, and life transition assistance.

Laurel can be reached at 613-876-3443 or laurel@realtysource.com

Thinking of selling your home? I am dedicated to making the Buying and Selling process as seamless and stress free as possible for my clients.

Servicing the Kingston and Area Ontario market including smaller surrounding centres such as Napanee, Deseronto, Odessa, Gananoque, Brockville, Verona, Parham, Sharbot lake, as well as all of South, Central and North Frontenacs.

Laurel Amey
laurel@realtysource.com