The pandemic has fueled a lot of changes in all aspects of our lifestyle and economy, including the real estate market. In the past year, we’ve witnessed buyers rushing to purchase new and more spacious homes with outdoor space. This trend has been leaning strongly towards going bigger, but experts say it might not be long-lasting.
But what about the opposite? Is downsizing your home during a pandemic a good idea? What are the advantages? What are the possible drawbacks? Let’s look at who should be downsizing their home this year.
- It’s a great time to sell a large home
This may be the best time to sell your large home because they’re in very high demand right now as families are looking to move from the city to the suburbs. They have kids, at-home gyms and work from home, so they need the space.
In addition, the real estate market is booming and now is the time to sell your property at an excellent value you may not have otherwise gotten. Listing your property highlighting in-demand features like a home office, fast Wi-Fi, and outdoor space will increase your value significantly and outdoor space will increase the chances of your home getting snapped up quickly.
This time next year, the big house rush may already be over, so if you’re planning to sell either way, now is the ideal time.
- It saves money in a time of economic uncertainty
With so many people being job displaced at the moment, it’s a difficult time for many of us. Economic uncertainty is one of the primary reasons why people choose to downsize their homes, so if you are thinking about it, it can be a good solution.
Whether you’re relying on the money or just trying to be cautious about finances, it’s a great idea to make a move to save money in a time of economy instability, especially when buyers are lining up and prices are going above asking.
- Lack of space can be an issue
Like it or not, the pandemic does mean that most of us are quarantining at home, so you can expect to continue to spend a lot of time in your house. While that may not be an issue at the moment, moving into a smaller house can be uncomfortable or create some friction.
Depending on what your lifestyle is like and what your everyday needs are, a smaller house may make certain activities like working from home extremely difficult and disruptive. That goes double if you have children and pets who need to use up all their energy.
- You might have a harder time selling later
Unless you know for sure you are planning on living in this property forever, downsizing may be a mistake. The trend is leaning strongly in favor of larger homes, which means that they are the most desirable and thus, the most valuable.
If you buy a smaller home and decide to sell a few years down the line, you may discover that buyers are scarce, or that you have to lower the price significantly in order to attract buyers. That can really impact your long-term financial planning.
Who is the ideal candidate for downsizing?
Downsizing your home is not an idea without merit, even in a pandemic, but it will work for the needs of certain kind of people.
- People who don’t work from home
For a person or couple who does not operate a business from their home, doesn’t need office space, multiple guest rooms, or a large dining room for entertaining, downsizing can be a sensible solution that doesn’t cause much disruption.
- Retired couples who can use the equity
Retired couples often find that large homes are cumbersome. No one wants to clean vacant rooms, climb stairs multiple times a day, or pay high utility bills.
Plus, they tie up equity that can be better used elsewhere, especially if planning on doing some traveling, starting a side business, or looking to pad your retirement fund. Selling your large home in favor of a small one can be a great compromise, even during a pandemic.
With everyone chasing large homes, going in the opposite direction can feel like a mistake – or a very smart strategic move. Depending on what your needs are at this point in your life, you may find that a large house does not make sense for your lifestyle or your finances anymore, and the right move is to sell and go smaller.
On the other hand, this decision should not be taken lightly. If you decide to sell and then discover that a smaller house is impractical for your lifestyle and difficult to live in during a pandemic, you may have a hard time selling it at a good price later on.