Quiet, simplicity and the freedom to pursue their passion for boating. All were motivating factors for a couple in their 40s who just sold their large Victorian-style house in a trophy suburb to move to a less congested area where they have ready waterfront access to their small yacht.
“They’re heading for a simpler life where they can enjoy their hobbies more,” says Alice Kreider, the Re/Max broker-associate who listed the big Victorian. Like an increasing number of homeowners, the couple–he’s a self-employed software designer and she’s a homemaker–have the liberty to select any living environment they fancy: city, suburban or rural. That’s because the family’s breadwinner has a successful computer-related business he can operate from a home anywhere.
To be sure, most Americans still opt for the largest property they can afford–or the one in the most prestigious neighborhood–unless age, illness or a financial setback make a move necessary.
Empty-nesters, age 60 to 80, are most prone to voluntary downsizing. But as society’s lifestyle tastes become more eclectic, some younger people with children are voluntarily moving into lower-cost areas or smaller homes.
For instance, the couple that just sold their Victorian place still have two preteen children in the nest. In an atypical move, they’re leaving a high-status suburb for a lower-cost neighborhood that’s far closer to a marina where they can dock their boat.
“These days, homeowners don’t have to stay tied to where they are. They can go ahead and explore,” Kreider says.
But if you’re planning to hop from a big or expensive property to one that’s either smaller or more modest in terms of monthly payments, it’s best to make your housing move cautiously, real estate experts warn.
They offer these four pointers:
– Spend some time contemplating your navel.
Introspection is the key to deciding whether a drastic change in lifestyle is really going to work for you, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents, based in Evergreen, Colo. After a Saturday of exhausting mowing and pruning in your large yard, you may be ready to move to a condo-apartment that evening. But would you really be happy giving up the independence of a detached single-family home? Maybe not.
The solution to your home-maintenance problems could be found in hiring the help you need for exterior yardwork, painting and interior cleaning, Berard points out.
Remarkably, this idea may not automatically occur to those who grew up in families with modest incomes, where the thought of hiring help was out of the question.
Yet maybe you and your spouse are putting in more hours at the office than did your parents. For $200 a month, you may be able to cover the basic costs of cleaning and maintenance, sparing you precious hours of free time.
Another option is to move into a newer, though smaller, property. You may feel comfortable living in a home with less floor space–assuming it has an open, airy floor plan, high ceilings and possibly even skylights, says Berard, president of his own independent real estate company.
Assuming you select a quality builder, you can usually expect five years of trouble-free living when you buy a brand-new house.
– Realize that your priorities may have changed since you last moved.
Maybe you had several small children when you bought that two-story traditional 10 years ago. If the children are grown and seem unlikely to boomerang home again, the time could be right to make the transition to a smaller habitat in a pulsing city center where you can walk to cultural attractions, says Elaine Dolley, a broker-associate for Coldwell Banker.
But people who are used to the elbow room of the suburbs should carefully consider the implications of a popular city neighborhood, such as the common problem of finding affordable parking, Dolley says. Take your time to ponder alternatives and talk to neighbors in an area you like before committing to a major housing change.
Obviously, there’s no single right answer for people in any income bracket, only a series of potential housing trade-offs, she says.
But she urges people to be realistic, not idealistic about their true lifestyles. Given your schedule, will you actually use the pool or rooftop deck on your “must have” list? Do you actually need four or five bedrooms for guests? Often a sober look at your lifestyle will tell you that downsizing wouldn’t be that much of a sacrifice, Dolley points out.
– Factor tax-law changes into your equation.
It used to be that tax considerations drove many who were moving to go to a home of equal or greater value, assuming they had built equity in the first property. But under current law, most Americans can now legally avoid paying capital gains taxes on a housing profit of up to $500,000.
The new law makes downsizing to a less expensive home a more plausible option for many from a financial standpoint, Berard notes.
While the freedom from capital gains taxes hasn’t caused a sudden surge in downsizing, especially in communities with rising home values, it has become a more influential factor, he says.
– Show grace if forced to reduce your housing expenses under duress.
Simplifying one’s lifestyle isn’t always a voluntary matter, of course. Maybe your penchant for frequent dining at fine restaurants, or for lavish overseas vacations, is putting you in a financial hole so deep that it’s clear you’ll have to stop digging sometime soon.
When constant calls from creditors make it obvious that you’re overextended financially, you may well be looking at a mandatory housing move, says Joe Duffy, an agent for the Century 21 chain.
Duffy, who has sold homes for 13 years, says clients who are forced to scale down their monthly payments through the purchase of a less expensive property don’t always find the experience as unpleasant as they had expected.
“We’ve had many people who have downsized from a single-family home to a condo-apartment and they’re very happy,” he recalls. Many are surprised at how liberating it can feel to have someone else do their home maintenance, according to Duffy.
Of course, not everyone is delighted to take a downward step on the housing ladder against their will.
“Sometimes you just have to face the fact that you have champagne tastes on a beer budget,” Duffy says.
