The housing market is still sizzling hot, with single family homes in steep demand. Those who are looking to cash in on the momentum, might want to consider downsizing. Not only will they be cutting down on future home-related expenses, they stand to make a killing in the marketplace.
Downsizing is a hot trend in increasingly expensive cities like Los Angeles.
"It appears to be a trend in the Los Angeles area to rent smaller and smaller housing units to single, young, urban professionals," said Lyle Boatman, ADU designer consultant at Maxable. "Lifestyle considerations are more important than acquiring square feet to house furnishings and unused accoutrements of the past. In addition, many recent college graduates are making smaller real estate choices to help with managing the cost of student loans."
You'll Likely Make a Big Profit If Selling a Big House
"It's a seller's market, so most people are making a significant amount of money by selling now," said realtor Julie Upton. "You can buy something smaller for less money than what you'll likely get from your sale."
Buyers Are Eager To Take Your Place
"There has been a cultural shift during the pandemic seeing upper middle class primary city dwelling families or couples move to smaller towns with more open COVID regulations," said Nathan Netz, owner of Upstate Homebuyers. "For instance, if the reason you lived in a cramped two bedroom in New York City was for the nightlife, culture and great job -- and then the nightlife and culture disappeared and your job went remote, why not move to a smaller city, take that money you've been spending on an apartment and upsize into a large four-bedroom, three-bathroom with a backyard for your kids?"
Lower Mortgage Means Extra Cash
"In light of current economic circumstances the number one reason people are downsizing is to pay off [their] current mortgage and pay for a house in cash," Netz said. "Think about what you could do with a couple extra grand in your bank account every month."
For Retirees, It's Often 'Right-Sizing'
"Downsizing is right-sizing to correspond to retirement or other changes," Boatman said. "For many the income possibilities in life shift dramatically at retirement. Ensuring that household circumstances correlate to this shift in income is a smart move; essentially right-sizing one's household to meet the new circumstances."
"One of the biggest pros to downsizing is less maintenance," said Jonathan Christie, real estate expert and CEO of The Property Buying Company. "Smaller homes mean less to go wrong and less to clean. This can make your home less of a burden, and help you to maintain it much easier which helps if you decide to sell in the future."
A Smaller Home Can Be Easier To Grow Old In
"Another pro is that you can live there even into retirement if you are a young family," Christie said. "Downsizing means less area to move around in, which is great for elderly people. You can comfortably stay in your home for your whole life."
You Can Finally Declutter
"The biggest pro of downsizing is getting rid of the stuff that accumulates through the years," said Allison M. Paoli, realtor at Destination Havasu. "There is something very satisfying and productive about purging and re-organizing. Downsizing forces us to accomplish this task. Decluttering personal space declutters our minds and gives us optimism as we move into a different lifestyle."
You'll Make Smarter Decisions With the Space You Have
"The more space you have the more you feel to buy things to cover every inch of it," said Brady Bridges, broker and owner of Reside Real Estate in Fort Worth, Texas. "One of the beauties of downsizing your home is the ability to stop wasting money on frivolous items and prioritize only those items that are important in your life and are necessary for your home."
Help Out the Kids
"We are seeing people downsize to help put themselves in a better financial position but also increasingly so, we are seeing people downsize to put their children in a better financial position," said Casey Archibald, a realtor. "There is a huge percentage of new buyers that are being gifted funds from their family and we are seeing parents feel the need to help their kids get in the market and they are often doing that by downsizing."
Align With New Perspectives Inspired by the Pandemic
"The economic uncertainties coming with COVID-19 pandemic have made people re-evaluate their needs and necessities," said Jordan Scarpino, real estate broker and owner of West Coast Real Estate Hub. "While people used to prefer the most spacious homes before, now they consider the wastefulness of unused spaces. Also, the pandemic has made people live closely with their families, which made them understand the significance of intimacy."
Downsizing Is a Safe Choice in a Time of Unknowns
Hopefully the pandemic will soon be over and the world can feel a bit less upside down. But the truth is, we don't know what will happen, and opting for a smaller residence that gives us more financial freedom could be the best move.
"The future is always unknown, especially with the current pandemic, and having a smaller place will help financially in many ways," said Christie.
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