Senior Americans who are planning to downsize need to be aware of sticker shock. Do not assume that your retirement plans will include moving to a smaller house. Retirees looking to lower their housing costs could be surprised by the tight housing stock and fierce competition for smaller homes. Michele Clark, a certified financial planner, said that downsizing in both square footage and cost… does not necessarily occur. Clark Hourly Financial Planning and Investment Management is based in Chesterfield, Missouri.
Clark stated that clients are often surprised to find out this information.
According to Zillow, the median home sale price in America has reached $238,000. This is largely due to increased demand and limited inventory. The value of homes has increased 8.7 percent in the last year, and is expected to increase another 6.5 percent in the next year.
The competition is mainly for houses at lower prices, so retirees who are looking for senior downsizing will be competing against first-time buyers.
Jessica Lautz, the managing director of survey research for the National Association of Realtors, stated that smaller homes are more competitive. “All generations are buying similar types and sizes homes.”
According to the group of realtors, 65-74 year old homeowners who are looking to downsize sell their $270,000 homes and buy a new home for $250,000.
The housing market collapsed a decade ago, and millions of homeowners saw the value of their homes plummet. However, prices have generally recovered those losses. Due to strong labor markets and economic growth, the demand for houses has outpaced supply.
Lautz stated that in the past we had seen senior downsizing help Brunswick NC on an extensive scale. Now, however, it is not as common. It could be personal preference or because homeowners are caring for other adults in their home.
Many retirees realize that downsizing won’t result in the cost-cutting desired. They end up staying put.
Although moving to a smaller house can be a smart decision for some people, it is important to budget for all costs associated with the purchase.
Peter Lazaroff is a CFP and chief investor officer at Plancorp, St. Louis. “People don’t realize that there are additional expenses to buying a home.” There are closing costs, agent fees and moving expenses. Also, there are repairs and furniture.
Lazaroff said that he sees retirees taking a lump sum out of their retirement accounts to help pay for the downsizing of their home.
Lazaroff stated that “they say it’s not that much of a deal to make one-time withdrawal.” They must take enough to pay the taxes.
“And they could be pushed into a higher tax bracket by the distribution.”
It’s important that you think long-term, not just about the moving costs.
Lazaroff stated, “I believe you shouldn’t downsize to somewhere that you can’t envision living for the rest your life.”
Call Brunswick Organizing Solutions if you need help in downsizing, packing, or moving. Our professional organizers are always ready to assist you.
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