You dropped your youngest child off at college earlier this fall and have officially joined the ranks of the empty nesters. One of the first questions that usually comes to mind is should we downsize our San Diego home. The kids are gone and we probably don't need this big house. But is buying a smaller home right for you?
There are pros and cons to downsizing. Consider your finances and lifestyle before making a decision.
Reasons not to downsize:
You want a place for your children and grandchildren to stay when they visit. The family is spread all across the country and you want to have a place for everyone to gather for the holidays and vacations.
You can't bear to part with your cherished belongings. You have been in your current home for many years and have filled it to the gills with mementos you don't want to part with.
You aren't you emotionally ready to leave? You are not ready to pack up and leave a lifestyle you worked hard to create. Leaving family, friends and familiar surroundings is more than you can bear.
You enjoy the prestige that goes along with your luxurious home. A smaller home will not portray the correct image of success.
Reasons to downsize:
The lower house payments that accompany a smaller home would give you more discretionary funds to travel and enjoy other recreational activities.
A smaller homes means less to maintain and more time to play.
You or your spouse, are not able to navigate the stairs like you use to and a single level home is more desirable.
A smaller, newer home is more efficient and better for the environment.
You need to be closer to a spouse who is in a nursing home?
Make sure it's affordable:
If you decide to downsize, make sure the place fits both your pocketbook and your lifestyle.
Talk with a real estate professional about how much money you will net from the sale of your current home, as well as the costs of buying another one. This will help you determine if the move benefits you financially.
Under current tax rules, up to $500,000 (if you are married and file jointly) in profits from the sale of your principal residence are not taxable as long as you've lived there for at least two of the previous five years. Up to $250,000 in profits are not taxable if you're single. Consult a tax adviser to discuss your situation.
Look into how much it would cost to move and to maintain a smaller home. Make sure it really is cheaper to live there.
Decide to downsize only once you're satisfied that the finances make sense.
Buy into your new Lifestyle
A smaller house in your current neighborhood could be the right decision if your priority is maintaining close ties to neighbors. Just make sure there are amenities like public transportation and stores nearby if your health begins to deteriorate.
A condominium or a unit in a retirement community could be perfect if you never want to mow again, or if you want to focus on travel, hobbies and perfecting your golf stroke in the company of other seniors. Just remember you'll have to pay maintenance fees for the upkeep of the common areas. Talk to current residents to see whether they're happy with the way things are run. Also investigate the rules. If the association forbids pets and you're a devoted dog-owner, be prepared to move on.
You may prefer to purchase a duplex or something similar. Renting one of the units will bring in extra income, and you'll have built-in neighbors.
Thinking of downsizing your San Diego home and want to talk with a real estate professional? We are glad to provide you the information you need to help you make the right decision for you.