Many Boomers tired of waiting for the real estate market to improve to sell their homes might want to consider making a move now. The housing market appears to be stabilizing and home sales are picking up. And, while owners may not get as much for their homes as they would have several years ago, they won't pay as much for a new place either.
So if you're ready to make a move, here are 10 downsizing tips:
Have a plan.
Think about what kind of lifestyle you want. Do you prefer an urban setting? Or do you need a yard? Do you want to be part of a community that offers lots of activities and amenities such as golf courses and swimming pools? Or are you a more independent type who seeks out opportunities on your own? "Investigate a lot of different options," suggests Renee Funk, president at the Relocation Company, a Chicago-based firm that helps move empty nesters. If you've raised your family in the suburbs and don't want to leave, Funk recommends looking at the newer condominium buildings now commonly found in many suburban downtowns, near shops and restaurants. These buildings can provide a similar lifestyle to the city while staying in the suburbs," says Funk.
Consider a short distance move.
Not everyone wants to move to a warm-weather destination, such as
. Many downsizing Boomers would rather stay here. Take Ruth and Don Mattison. They sold their 4,400-sqaure-foot house in south suburban Mokena and bought a house at the active adult community Shorewood Glen in Shorewood. Their son, a firefighter, and daughter-in-law and their three children live nearby. The Mattisons like to help out with the kids when their son is on duty. So they stayed near their family, but got rid of the big house and all the chores. At the new house, the landscape work and snow shoveling is taken care of for them.
Before they moved, the Mattisons decided their new home would probably be their last move. So they thought carefully about whether or not they wanted to live in a neighborhood with young families. The Mattisons decided that they'd rather live at Shorewood Glen where residents must be age 55 or older. Ruth Mattison says, "We wanted to move into a neighborhood with people our own age who shared our interests. We all have lots in common."
It's a good time to buy.
Home builders are offering good deals. So good, in fact, Ross and Susi Carlson sold their big house in Lisle and bought two houses. They purchased a townhouse at Carillon Club, an active adult community in Naperville. It's close to their children and grandchildren who live in the area. But they also bought a brand new house in St. Augustine, Fla., a place to get away for a few months during the winter. "The Florida real estate market is a super opportunity now," says Ross Carlson.
Look for universal design.
A house should be accessible to those of any age or ability, with features such as wide doorways and flat thresholds. This may not seem important to vigorous Boomers, but it could be an issue in the years ahead. "A single-story house is best," says Bill Worn, of Worn Jerabek Architects, Chicago. Worn is currently adding a ground floor master suite to his own house, so he and his wife can stay there for the next 20 years. "Look ahead," he says. Other important features include: slip resistant floors, lever door handles, and reinforced bathroom walls that can support grab bars. Another consideration is indoor air quality. Clothes dryers, bathrooms, stoves and fireplaces should vent outdoors. "Indoor air quality is more important as we age," says Worn.
Consider cash flow.
The downsizing phase of life usually means you won't be earning as much money as you did when you were younger. "Think about cash flow," advises Mark Gilbert, principal at Reason Financial Advisors, Northbrook. What are your sources of cash? How long will you work? How much can you expect from social security payments, or a pension? Will investments generate enough income to cover expenses? Many Boomers think they'll sell an expensive house and buy a cheaper one, resulting in a nest-egg ready to draw on for living expenses. "In my experience, people find their downsized house isn't that much cheaper than the old one," says Gilbert.
Get a mortgage.
The American Dream may be to live mortgage free, but it often makes sense to have a mortgage, even a small one. Assuming you make a profit when you sell your current home, the proceeds can be invested and used for living expenses, notes Gilbert. If you sink all the proceeds from the sale of your house into a new house, you may not be able to generate enough cash to cover expenses. Renting could make sense, too, if rents are less than the cost of owning, says Gilbert.
Watch the taxes.
Many Boomers consider moving out of state to places like Florida that have no income tax, in order to lower their overall tax bill. But don't forget other hidden costs, such as travel back and forth to visit family. Also, even though home values have fallen, you may be eligible for a tax free gain on the sale of a house. Any gain, up to $500,000 for a couple, is tax free. "It is one of the most generous provisions in the tax code," says Bob Meighan, vice president at Turbo Tax, a software tax preparation company in
Make a smart move.
Before the move, focus on how you want to live. Think through your new lifestyle and which items will make that possible. "People don't think enough about why they're moving," says Mary Jo Zeller, director at Gero Solutions, a company in Arlington Heights that manages moves for older people. If you're moving to a community that provides outdoor maintenance, you won't need the shovels and lawn mower. Think about using the extra room in the new place for the hobby you've always wanted to start, instead of saving it for guests who rarely visit. "Look forward, not back," Zeller advises.
If you're selling a house, you'll probably spend time de-cluttering the place so it looks good for prospective buyers. But don't stop there. The Carlsons who bought two homes sold unwanted items on