Yesterday I was reading an interesting article that referenced a study blaming seniors for the housing shortage. However, I believe the lack of price filtering due to underbuilding locally is a more significant factor. This article made me want to delve into some factors that homeowners should consider when preparing to enter or maintain their retirement.
Is Downsizing Right for You?
It’s not untypical for some of my older clients to find themselves with larger homes than they need. Their kids grow up and move out, and now there is a lot of unused space. All that extra space has a cost associated with it that can burden a home owner’s ability to save for and maintain retirement.
The Burden of a Home That’s Too Large
Let’s compare a 2200sqft home $375K vs. a 1400sqft $275k on a few factors.
Property Taxes
In Lane County, Oregon, the Average Tax Rate is 0.86% of Fair Market Value.
Utilities
According to Nubeo, Eugene pays about $121 for a hypothetical 915 apartment, including electricity, heating, water, and garbage. That’s about $0.132 per sqft.
Home Maintenance
Some say an owner should expect to budget 1-3% of the home’s value annually for upkeep on a home. Let’s assume 2%.
Insurance
Insurance can vary for a variety of reasons, including the age of home, location, and owner’s profile. Having to insure a smaller house will cost less. Less square footage means less cost all around.
Mortgage
What if downsizing could lower or eliminate a mortgage payment of $500 or higher?
Property Taxes
In Lane County Oregon, the Average Tax Rate is 0.86% of Fair Market Value.
Contact Us Today
We mostly review the financial benefits but as one of our senior clients, who recently downsized had found, his larger home was as much of a financial burden as it was an anchor of his time.
Older homeowners and their advising professionals should seek the advice of an experienced mortgage advisor who has experience with working with elder homeowners and can offer a variety of lending solutions, including reverse mortgage, as well as a realtor with extensive experience in working with older clients. We are always happy to refer our clients to a qualified realtor.
Contact us today to see if downsizing is right for you.
