Who wants less room for storage and entertaining? Not as many people as the news might suggest. A downsizing trend in the U.S. housing market continues to make headlines, but it’s not completely driven by a sudden craving for cozy quarters. Inflation and record-high utility bills are forcing many Americans to squeeze into smaller homes than they prefer.
Downsizing is tempting for empty-nesters who tire of maintenance and paying for space they no longer use. It might seem like an easy fix for a house that’s become outdated, nonfunctional, or too big. But is the grass really greener at that three-bedroom charmer near your grandkids, or is it wiser to stay put and consider other options?
Reducing your square footage makes sense if you can find what you want and come out ahead financially—a big “if,” given the current state of high interest rates. On the other hand, renovating often solves problems, increases home value, and may help you avoid downsizing regret.
Here are a few things to consider while you wistfully browse condos and cottages online.
Can You Afford Your Current House?
Utility costs are up. Insurance rates are up. Now, 30 percent of Americans are paying more than they should for housing. For best affordability, you should pay a maximum of 28 percent of your income toward your mortgage, taxes, and insurance. If you’ve been priced out of your home, then downsizing might be better than draining a high-yielding savings account to make up for the shortfall.
But if you aren’t struggling to make ends meet, then the numbers might not add up for you to downsize. If you borrow money to purchase your next house at a high interest rate, you could end up with a less-valuable asset down the road than the one you own.
Is the Market in Your Favor?
Housing prices are up, but so are interest rates, so most homebuyers can’t afford as much house as they could even two years ago. You might not see a bidding war for your big house. But if you can find a buyer, pay cash for your next house to avoid the current high interest rates, and find a home you like, the dollars might make sense.
A lot of factors go into home values, though. There’s stiff competition for smaller homes now, so you could be buying in at the top of the market. And with fewer buyers for big homes, yours might not fetch what you deserve. But new-home construction is on the rise, so if you’re looking for a new build, the market could be friendlier to you.
Is Home Renovation an Option?
Moving is a hassle, and your current home may need updates before you sell. Any new house is full of unknowns—especially if you’re swapping your current lifestyle for a new one. Ask yourself, do you really have too much space, or are you just not using it correctly? Are you simply tired of looking at the same rooms and same problems?
Before you give up guest rooms and a formal dining room, or trade your honey oak cabinets for a beautiful farmhouse kitchen, take stock of what you love about your home. Make a wish list. Talk to a home renovation company. Think of what you might do with a finished basement or attic, which delivers the best bang for your renovation buck. Using those spaces wisely could open up options to make the main level more liveable with a bigger kitchen, a bar, or hobby rooms.
Explore Downsizing with CCG
Downsizing can have upsides and could be right for your family. CCG has extensive experience with clients who have downsized and loved it, as well as those who decided renovation was a better option. We’ll walk you through the many financial and lifestyle factors and help you make the right decision. Contact Central Construction Group to schedule a free, no-obligation consultation on the downsizing dilemma. Call 317-213-6246 or connect with us on Facebook or Instagram.
