By Victor Normand
Published: July 2010
With graduation season here, a number of families are beginning to experience a change in composition affecting their housing needs. Perhaps that four bedroom house complete with oversized kitchen and family room along with that soccer field size backyard no longer corresponds with their current needs. That riding mower sure was fun over the years but the continual maintenance of that emerald gem adds up in terms of time and money. Wouldn’t it be nice to maintain a smaller patch of lawn, to more fully utilize a home and its spaces in contrast with your current residence, where whole rooms get little use, if any? We’re quite attached to our homes certainly and they’ve served us well but as those little birds begin to leave, maybe it’s time to make that next lifestyle choice and downsize the nest.
The economy is also a factor these days favoring a reduction in housing requirements. Recessions do tend to make us more conservative about money in general and living expenses in particular, but even before the current economic hard times, a 2006 survey by Hanley Woods, a market research firm found that 58% of affluent baby boomers said they are very likely or somewhat likely to move to a smaller house within the next 10 to 15 years. According to the National Association of Home Builders the average size of a home in the United States in 1970 was 1,400 square feet, in 2004 it had reached 2,330, nearly doubled in size (according to the US Census Bureau, the average size of a US home as of 2006 is 2,469 square feet). Interestingly, over the same 35 year period, average family size has declined by a full half person from 3.14 down to 2.62 people per household.
Strictly from a sociological point of view, some argue that when you have more bedrooms than you need, it is time to downsize. But there are some compelling economic reasons that make trading in the big colonial for a smaller house or condominium worth considering. They include:
- Lower operating costs. According to Runzheimer International, a management consulting firm, the average annual saving in utilities and property taxes resulting from downsizing to an 1,800 square foot house from a 2,800 square foot home is $1,300 in utility costs, and $2,600 in property taxes. The savings are significantly greater as you get closer to Boston. Other costs like property insurance, lawn care, snow removal, and general maintenance will also be lower
- Lower cost of living. Downsizing is also an opportunity to move to a location where living expenses can be lower. For instance, moving closer to work or to a more urban setting may mean only one car is needed in the family
- Financial Planning. Strictly from a financial perspective, downsizing from a large house to a smaller one leaves the owner less exposed to a falling market, which becomes more important as the owners approach retirement. Furthermore, tying up capital that could be invested more appropriately should also be considered.
- Supply limitations. The trend toward smaller houses is just beginning, but it will grow and as it grows expect prices to rise as demand for these smaller houses outstrips supply. Again, the best value goes to the early shopper.
As always we‘d love to be the company that you turn to for help with making your next housing move.