Residential Real Estate in SW Washington State

Residential Real Estate Services with Passion, Integrity, Knowledge

It’s a Seller’s Market! Should I Downsize Now?

by

A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their houses in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market.

In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

  1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
  2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
  3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in an article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values which makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, let’s meet up to help guide you through the process.

Where Did Americans Move in 2016?

by

This is a fascinating chart and oh so very true! Last year I assisted three out-of-state buyers in their move to our area. Although, come to think of it, there were two more that moved cross-country to the east coast as well. We’re a mobile sort of society, that’s for sure!

 

Some Highlights:

  • For the 5th year in a row, the Northeast saw a concentration of “High Outbound” activity.
  • For the first time ever, South Dakota held the top spot for “High Inbound” states.
  • Much of America’s outbound activity can be attributed to Boomers relocating to warmer climates after retiring.

You Can Test Drive a Car … But Not a House!

by

The last couple of weekends have included a few hours helping our son decide what car to buy. We’ve been to this dealer and that, had him prequalified … and have driven a number of cars, usually with the all-chatty salesman in the backseat telling us exactly why this car is THE one to buy. We’ve driven some brand new cars and are now taking a look at a few that a just a couple of years old (Mom insisting that maybe the payment will be a bit easier on his monthly budget.)

Now that we’ve graduated to the used car market, I’ve been busy reading CarFax reports, looking over my son’s shoulder and hanging onto the passenger “Lord Help Me!” strap conveniently located just above most of the passenger windows. (Word to the wise … don’t ever go on a test drive with a 21-year old male …. )

Now that I’m safely home, I’ve been able to reflect on the disparity between buying a car and buying a house. We’re out driving around in a $18,000 car, testing the brakes, going around corners, up steep hills, accelerating on the freeway–all with a eye on making sure that the vehicle seems safe, feels good, and is worth going to the step of taking it to our trusted mechanic before going down the buying path.

However, buying a house … many times more expensive, doesn’t include that same test drive. There’s no chance to sit in the house long enough to decide if it’s drafty, cook a meal in the kitchen and see if the layout really truly works or pack the closets to see if the clothes all fit. All of those things are a bit subjective. We think it’ll work. We walk through the house–maybe a few times–then begin the purchase process. With careful thought and due diligence, we hire a trusted inspector to test and prod the house to reveal its strengths and weaknesses. We measure the rooms, sometimes draw them out on paper and hope everything fits.

But test drive? Nope. That’s reserved for much smaller purchases … like cars, trucks, and RVs.

As Agents/Brokers, it’s important to provide as many opportunities for our Buyer clients to look at a house at their own pace. To figuratively kick the tires, lay on the floor of the empty bedroom to see if the bed fits and stand in the pantry to evaluate the food storage. Because buying a home is truly the largest purchase they’ll ever make. It’s the best we can do .. their test drive begins the day they move in.

*photo courtesy of egg on stilts via Flickr