The practice of moving to a smaller property during life’s transitions has been around for decades. Many folks look to move to a smaller home once they become empty-nesters or as they phase into retirement. The combination of the pandemic and current real estate market may challenge what we currently know about downsizing and change what retirement living looks like in the future.
The Evolution of Downsizing
Traditionally as homeowners age, they look to move to a smaller space to cut spending, lower maintenance responsibility, and rid of unused space. Baby boomers are now staying in their larger homes longer than past generations and many people are waiting until it’s too late to leave the home. 67% of people who relocate from age 53 to 92 do so in response to a household member’s health, rather than on their own volition.
A big reason as to why this generation is more reluctant to downsize is due to the current real estate market. First-time home buyers are looking for small, centrally located homes to begin building equity. The high demand for smaller homes between new homebuyers and retirees has pushed home prices higher. For example, the average price in Denver now exceeds $500,000, making finding a smaller home that is less expensive more difficult.
“Right-sizing” or “Smart-sizing”
These terms have become more common in the last year as buying a smaller home or less expensive home isn’t always the answer. Homeowners are now looking for right-sized homes where they can grow long-term roots. This may mean similar square footage, but in a single-level home without stairs or a condo closer to family and friends. This transition of focus to functionality and location from minimizing square feet could prevent a forced move due to health concerns in the future.
Increase in Suburban Sprawl
Because first-time home buyers often focus on small homes closer to the city center, finding a smaller space on the outskirts of town may help avoid a bidding war. The Coronavirus has pushed the workforce remote and emphasized the importance of space over proximity to work. The pandemic could have long-term influence on retirees choosing an age-in-place home in the suburbs over crowded retirement communities and increase future value of homes with more privacy.
Four Tips for Downsizing:
- Start Today – Don’t wait to begin downsizing.
- Plan for Forever – Decide what type of home you are looking for and what features will keep you in the home long-term.
- Find an Agent – Partner with a real estate agent who understands your needs or specializes in downsizing or retirement living.
- Talk Money – Discuss with your financial advisor what you can afford and strategies to finance your new home.
Downsizing is Still Alive
Downsizing is not dead but current real estate trends may change what retirement living looks like in the future. COVID-19 has changed our day-to-day lives, and although moving during a pandemic may not be ideal, it may be a great time to start planning for the next phase of life. For more information on the Denver real estate market, click here to read our recent Q&A with Denver real estate agent, Jacci Geiger with Kentwood Cherry Creek.
Looking to Downsize?
Whether you’re planning for retirement or just trying to maintain balance between your financial future and living situation, the advisors at Sharkey, Howes & Javer can help guide you. Contact us for a free consultation today!