Whether you’re in the starter home you purchased years ago or you’ve moved around a few times, life changes can sometimes necessitate a change in scenery. Perhaps you’re adding kids to the family and need additional room, a more family-oriented community, or a better school district. Or maybe you’re becoming empty nesters and are ready to downsize into a smaller, more manageable home that will be comfortable for the next phase of your life.
Regardless of the reasons that might have you considering a move, it’s important to think about the upsides and downsides of a home transition – in terms of both logistics and your overall lifestyle. Financial considerations aside, there are a number of reasons that it might make more sense to take up residence in a larger or smaller home; however, the homebuying and selling process can be pretty involved, so you’ll want to make sure you think long and hard about all sides of the coin.
How Big Is Too Big?
When it comes to purchasing a new home – whether for a growing family or retirement – it’s important to consider how much space you really need. A common trend among retirees is actually to upsize, in order to accommodate adult children living at home, more frequent visits from guests, etc.
But you’ll also want to consider a few important things: how much home are you prepared to maintain; are guests going to visit often enough to warrant the extra room; will the long-term expenses of a larger home be manageable with your planned withdrawals from retirement accounts or on a fixed income? Changes in property taxes are magnified by the amount of land and house you own, so even a small change to the baseline tax rate can translate to a big change in the bill you owe each year. It’s critical to build some fluctuations into your long-term view, so your new home doesn’t bust your budget.
Layout, Layout, Layout
Not to sound like a broken record, but the layout of your new home is critical. If you have a baby (or babies) on the way, you’ll want to make sure that you have enough bedrooms to accommodate your whole family over time – after all, the last thing you want to do is have to move again when the kids are only half-grown.
On the other side of the coin, if you’re considering a “forever” home – whether for retirement or otherwise – you’ll want to account for the layout in terms of your own long-term health and ability. If you plan to be in your new home for thirty or forty years, you might consider something that will be more conducive to an older you. That may mean opting for a ranch-style home; something that’s still roomy, but doesn’t have a basement or upper level with lots of stairs to contend with.
Timing Is Key
The real estate market is constantly fluctuating, driving home prices up and down. If you recently purchased a home, chances are good that most of your mortgage payments have only been going to interest – so even if you’ve lived in a home for five years, you might not have a lot of equity built up. If home prices have been on the decline, this could leave you seriously underwater on your loan, meaning you could lose a fair amount of money on a sale.
If that’s the case, it might be time to consider an addition, rather than a sale. Adding on to your home, renovating the existing space, or rehabilitating defunct areas can all be a great way to increase the functional, livable space of your residence without drastically changing your cost of living. And as a bonus, strategic home improvement projects have the potential to increase the overall value of your home – meaning that when the market swings upward again, you’ll be in an even better position to sell your home, if you’re so inclined.