If you’ve paid attention to trends the last couple years, then you’ve probably noticed there’s a rabid interest in “tiny homes.” And while you have to be a little bit eccentric to make the move from a standard-sized home to a tiny home, there is something to be said for downsizing.
The Benefits of Downsizing
If you look back over history, you may be shocked to see just how much the average home size has increased in recent years. In 1975, the median square footage of a new single-family home in the United States was just over 1,500. Now, four short decades later, that number is up to 2,467 square feet – a 61 percent increase. In the last decade alone, the median size has ballooned by 11 percent.
But are we getting McMansion fatigue? Are people finally starting to realize that being house poor isn’t the way to go? For many, downsizing is an attractive option. Here are some of the benefits to be gained from shedding excess square footage.
- Lower monthly expenses. The most obvious benefit of downsizing is that you’ll be able to lower your monthly expenses. If you’re currently paying $1,500 per month on a $350,000 loan, you could probably lower your monthly payment to $1,000 or less by opting for a smaller house in the $200,000 range. That’s $500 a month that can go towards other expenses (or savings).
- Reallocation of money. If you have a lot of equity in your current home, selling also makes sense. Not only can you lower your monthly expenses, but you can reallocate any extra money to retirement accounts, home upgrades, a child’s college tuition, or any number of other things.
- Less is more. The first question people ask when it comes to downsizing is, “Where will all my stuff go?” Well, maybe this is a sign that you need to sell or donate some of the junk you’ve been holding onto. Less is more and you’ll find it’s freeing to get rid of things you’ve accumulated over the years.
- Easier to sell. The more square feet your home has, the fewer potential buyers there are. If the market eventually goes south and you need to sell your home, you’ll have a much easier time selling if the square footage falls in the median range.
When you start to think about it, downsizing is actually a really attractive option. Sure, every member of the family might not have their own private suite, but do they really need one? There’s something to be said for downsizing – financially, relationally, and mentally.
Six Signs It’s Time to Go Smaller
Not quite sure downsizing is right for you, even after reading about some of the benefits. Let’s check out some of the specific signs that it’s time to make the move.
- Lots of Unused Rooms
The first sign that it’s time to downsize is lots of unused space. Do you have multiple rooms in your home that rarely get touched? Think about how much space is being wasted. If the kids have all moved out and it’s just you and your spouse, do you really need four bedrooms? Two or three would suffice. Unused space costs money, in terms of property taxes, maintenance, and utilities. Downsize and start maximizing your home.
- Approaching Retirement
Most people start thinking about downsizing as they approach retirement. Not only do you generally need less space at this point, but you probably have a lot of equity built up in the house. By pulling that equity out, you can fund retirement accounts, use the money for major expenses, etc.
- Financial Issues
Are you struggling financially? While your home may have made sense when you purchased it, times change, and budgets fluctuate. As a rule of thumb, your monthly housing payment (mortgage, interest, taxes, insurance, etc.) should equal no more than 28 percent of your pre-tax income. Ideally, you want to be somewhere in the 10-20 percent range. If you’re way out of this range or are struggling to make ends meet, there’s no sense in building up debt in other areas or letting your house go into foreclosure. By downsizing, you can experience immediate relief.
- Lifestyle Changes
Just as finances change, so do lifestyles. Perhaps you were young and raising a family when you purchased your home. You had lots of income coming in, needed space for the kids, and were fairly grounded in your community. But now you’re retired and travel for four or five months out of the year. Do you really need the same house? Downsizing may work better for the stage of life you’re in.
- Feeling Overwhelmed
Sometimes all of the dollar signs line up and, from a practical point of view, your house looks perfect. However, somewhere deep inside, you’re feeling overwhelmed. You can’t stand the thought of cleaning such a large house. Well, downsizing can provide some serious emotional relief. It allows you to live a simpler and more focused life.
- Market Appreciation
When most people purchase a home, they have an appreciation dollar amount in their head. In other words, there’s a point at which they know that selling is the right move. Well, if your home has experienced a healthy amount of appreciation in a short time, then this may be a time to “cash out,” so to speak. You can then purchase a smaller home and apply that equity to something else.
Let Green Residential Sell Your Home
If you’re interested in selling your Houston home, think twice before hiring a traditional realty company that works on a six percent commission basis. If you’re selling a $500,000 home, that means you’re slicing $26,000 off the top!
Instead, give Green Residential a try. We operate on a flat fee basis, which will save you thousands of dollars. Contact us today to learn more about the many advantages of working with a flat rate realty company.