Looking to cut costs or looking to reduce space? Moving to a smaller home might be the answer.
The popular term is downsizing and with the Alberta economy in its current state this might be an option for many people facing job cuts. In Edmonton, downsizing means something different to everyone. Downsizing means trading in your 4,000 square-foot home or a 1,500 square-foot condo (which is still a big condo). It could mean changing from a suburban neighbourhood where there’s lots of room to an inner-city luxury apartment. Downsizing doesn’t have to be just about money.
Here are some things to consider when making this all-important decision.
Why do you want to downsize?
It makes perfect sense if you have some aggressive financial goals. A smaller house can, but not always, mean your mortgage is smaller, or utility bills and maintenance costs are lower. Extra cash when invested elsewhere can help fund your children’s education or accelerate your retirement savings.
Maybe your children have left home and there’s too much empty house to clean. Some folks downsize because they’re concerned about the environment and want a smaller, more energy efficient home.
Ask yourself what you need and what you want in the future and if a smaller or less expensive home will help you achieve your future goals.
Ok, what are your needs?
If you’re an empty nester with a huge home, think about whether you actually need that extra space. Does family visit often? Do you have hobbies? Do you need to store antiques or display your art? Do you need separate spaces for watching television? Picture your current lifestyle, with all of your possessions, in a smaller space. Will you regret your decision if you change your lifestyle?
What is your lifestyle?
Perhaps trading in your antiques and your sewing room for the extra cash to travel fits in better with your lifestyle. Perhaps the art you really only enjoy occasionally can be traded for experiences you can enjoy on a daily basis.
Do you want to eat out more, spend time shopping or going on road trips? Do you love cutting grass and gardening or is it really a chore? You don’t want to downsize and impact your lifestyle negatively.
What can you part with?
Sometimes our possessions can define who we are. Family heirlooms and children’s artwork can have sentimental value. How much space are these items taking up? Your desire to live a less cluttered, simpler life might guide you in some decisions about what can go and what is simply being hoarded.
What will it cost to move?
Professional movers, time away from work, moving a vehicle or two can be expensive. Perhaps downsizing means you need smaller furniture as well. If your reasons for downsizing are to cut costs, do the math and see if this idea will serve you in the long run.
Will downsizing save monthly utility bills? Will your mortgage payment either disappear or be cut significantly? Is your commute to work shorter now? Do you have to pay for maintenance?
Will your home sell for the money you need?
In a buyer’s market, your house will sell eventually but perhaps not for what you are expecting. As a seller you need to take a good look at your bottom line and see what you want for your home versus what you need. Adjust your expectations if you know that in the long run, selling is the best option for you. Keep in mind, that in a buyer’s market you may take a hit or have to wait a while longer for your home to sell, but you will also be a buyer and you may be able to make up the difference in a subsequent purchase of your downsized property. It is always advisable to wait until your first property has sold before you purchase the second, or get a condition in your contract to this effect.