Baby Boomers Staying Put

In the past, many empty-nesters downsized upon sending their children away for school and growing older. However, the Baby Boomers are defying this traditional pattern. With roughly 10,000 people reaching age 65 each day for the next 15 years, and 17% of the 76 million Boomers already in retirement, the decisions this generation makes are central to the housing market.  63% of Baby Boomers plan to stay in their current home once they retire, according to a survey of 4,000 Baby Boomer households conducted by the non-profit Demand Institute. Why? Many simply are not financially ready, with a substantial amount of equity tied up in their homes. The financial crisis caused the average Boomer household's net worth to drop from $200,000 in 2007 to $143,000 in 2013 according to Federal Reserve data. Additionally, the median outstanding mortgage balance for 50- to 69-year olds more than doubled from $48,743 in 1992 to $118,000 in 2013.

The financial situation is particularly tough for those also in the sandwich generation--middle aged people who find themselves supporting both aging parents and their children. This recent phenomenon can be explained by an increase in the average life expectancy in conjunction with an increased number of "adult children" living at home. A 2013 Pew Foundation survey of 2,511 U.S. adults revealed that at least 15 percent of middle-aged adults are financially supporting both their parents and children.

The Baby Boomers surveyed placed little weight on "aging-friendly" homes, with only 1/5 planning to live in a senior housing. This is despite the fact that roughly 75% reported serious health issues such as arthritis or high blood pressure.

Downsizing in 5 Steps

Downsizing can be an overwhelming process, especially if you've lived in the same home for many years. Following these five steps will help minimize the hassle of downsizing.

Step 1: Assess your needs. Differentiate between what you have and what you need (those items that play an active part in your daily lifestyle). When is the last time you used your treadmill? Would a pair of running shoes be more useful and easier to store? Get rid of things you have not used, or have seldom used, in the past year. This ensures you are giving weight to things you already use---not things you might use some day in the future. If you are torn between keeping an item or giving it away, compromise: if you don't use it within the next six months, toss it. Go through your belongings in storage as well. Discard those boxes that have not been touched since being placed in storage. You can donate items to friends and family, join a free cycle group, or sell items online. The amount of things you get rid of should correspond to the amount of storage space in your new home. On that note, be sure to note storage space in your new home before you move.

Step 2: Clear shelves, cabinets, and closets. Decluttering is an important step in downsizing. One good method to see what odds and ends you actually need  is to empty a cabinet or drawer, and only put back what you use over a period of time--perhaps two-four weeks. This can be used for clothing as well. Hang all of your clothes in one direction. When you wear something, hang it up in the other direction. This will help you identify what you do and do not wear, thus making it easy to determine what to keep and what to give away.

Step 3: Measure your furniture. Will your current furniture fit in your new home? Take measurements of your current furniture, and get a floor plan (or at least room dimensions) of your new home. Consider door, closet and window placement when determining how to arrange your furniture in advance. Better Homes and Gardens's free Arange-A-Room online software can help you generate a floor plan.

Step 4: Organize. When packing, label boxes by room. If you know something will end up in storage, go ahead and pack it in a decorative storage box than can simply be moved from one storage area to the next. This will keep your home from getting too cluttered by boxes.

Step 5: Move. Move large items first. This takes the most energy, and will help you determine where smaller items go.  Unpack bathroom and kitchen items next, since these items are likely to be needed soonest. Finally, organize space while unpacking, placing each moving box in its labeled room.

Questions about downsizing? Contact me. 

Time to Downsize?

Americans tend to think that “bigger is better.” However, this is not always the case. Downsizing has many benefits, such as minimal maintenance (which frees up your time and money!). Many people decide to downsize once their children move out of the family home. It’s common for adults 55+ to move out of single-family homes in the suburbs and into downtown condos and lofts. Downtown is appealing because many of the neighborhoods are within walking distance to shops, work, restaurants, and nightlife. Condos and lofts are attractive because they are low-maintenance and more eco-friendly. Still, downsizing is hard, because often we hold onto fond memories of living in a certain home.

There are a number of factors to consider before you decide to downsize. First of all, how important is home size? Do you really need his-and-her offices, or could you be perfectly happy with one home office? This is simply a matter of personal preference and needs.  It’s important that downsizing feels like a step forward. If it doesn’t, perhaps downsizing is not for you. Nonetheless it’s best to be prepared for a trade-off. You might get less space and sacrifice a few of the luxuries of a bigger home in exchange for a lawn that takes less time to mow and a home that is less expensive and easier to clean. Downsizing is all about prioritizing yours wants and needs and weighing the pros and cons of your options.

Also consider how future scenarios may affect your lifestyle. Is it possible one of your kids will move back in? Do you sometimes host guests that would require a separate quest bedroom or an in-law suite?

It’s essential to consider costs. Downsizing will save you money because you are buying a smaller home and likely selling a bigger, more expensive home. It will also save you money through smaller mortgage payments, less property taxes, and reduced utility bills. Still, moving always costs money.  You may need to buy smaller furniture: large furniture suffocates small spaces. Consider selling your too-big furniture and unneeded possessions at a yard sale or on EBay or Craigslist. You also may need to rent a storage unit, if your new home cannot properly store all of your family heirlooms.

Finally, ask yourself what type of property you are looking for when you downsize. I have mentioned that lofts and condos (“attached homes”) need the least amount of maintenance. However, expect to pay monthly Home Owners Association (HOA) fees, which go toward maintaining the building. Sometimes, buildings with HAOs impose rules on their residences. On the bright side, many come with amenities, such as a gym and/or pool. Some people may prefer a single family, detached home. This option is most attractive to people who want a larger yard, more garage space, and other features that condo living falls short on. For people who have spent a long amount of time in a rather large home, it may be too much of a sacrifice to move into a condo that will likely be much smaller. Either way, pay attention to the neighborhood or area you want to be in. Do you want to be close to downtown? Is it important to live in a walkable, bike-friendly neighborhood? Do you prefer to live in a neighborhood with fewer children—maybe a development removed from schools?

Once you decide what you are looking for in your new home, go ahead and hire a realtor to help you in your search. I have experience with clients who are downsizing; contact me to see how I can help.

If you are building a home, seek out builders who specialize in smaller homes. HGTV recommends building a ranch or bungalow for optimal low-key living. 

Location, Location, Location!

Buying a home requires you to distinguish between your wants and your needs. Often, buyers can’t find a “perfect” home. Location is particularly tricky—the better the location, the higher the price. If nothing else, it’s important to be in a good location for resale value. If you have your heart set on a certain area or neighborhood but can’t find the home you want in your price range, you have several options.

Downsize. Consider a smaller house with a smaller yard and/or garage. The selling price of a home reflects the number of beds/baths in that home; sacrificing a home office or guest bedroom are both good options.

Switch home types. Generally speaking, single-family homes are more expensive than any other type of home, including condos, apartments, and townhomes. Don’t forget to consider HOA (homeowners association) fees or condo dues when comparing the price of a home to that of an apartment or condo.

Buy a home that needs work. Just as home price reflects the number of bedroom a home has, it also reflects the condition of the home. You will find the best deals in older properties that need some degree of renovation or repair. If you can live comfortably in the home for a few years, this may be the best option for you. Save money for repairs, and tackle them down the road. Remember that home renovation can be costly, although some modifications are inexpensive and easy enough to do by yourself (e.g., painting the walls).

Rent. The median age for the first-time homebuyer is increasing. Why? It’s more cost efficient, and provides the renter with more flexibility in the future. If you can’t afford your dream home just yet—don’t panic. Take the time to save up for a down payment, although be aware home prices may rise in the meantime. Look into signing a lease-to-own agreement (AKA lease-purchase agreement), which allows some of your rent to go towards your down payment.

Have any questions? Ready to buy? Contact me today!