We all know that big life events can have a major impact on what you need from your home, and retirement is one of the biggest changes many people face in their lives. This period of life can mean doing more of the things they enjoy, like traveling, visiting with loved ones, or taking on new hobbies. But what does that mean for a client’s longtime home?
If your clients are looking for ways to focus more on the important things in their post-retirement life, the answer could be downsizing. A recent article from The Balance talks about why it could be a great option, saying:
“There are many reasons to buy a smaller home—or to downsize from your present home—but sometimes, the idea that “less is more” is what propels homeowners to buy a smaller home.”
You Can Find the Right Home for Your Needs
The 2022 Home Buyers and Sellers Generational Trends from the National Association of Realtors (NAR) provides more information on why people of retirement age choose to move. It shows the need for a smaller home, the desire to be closer to loved ones, and retirement itself as three of the top reasons homebuyers over the age of 55 make a move. The table below highlights all the identified reasons for a home purchase by age group, with the 55+ age groups highlighted in green, and retirement explicitly identified as well.
If your clients are in this group, changing priorities may be top of mind for them today, and that could be driving a decision to downsize. After all, as lifestyles change, what a person needs in a home likely changes, too. Instead of a home office space or short commute to a city center, some may now prioritize a home closer to family or friends.
Plus, as The Balance notes, moving into a smaller home can open a schedule up even more. When downsizing, it often means spending less time maintaining a home through updates or maintenance and more time on leisure activities.
An Owner’s Equity Makes a Big Impact When They Downsize
Home equity plays a big role when selling an existing home and moving, making it a great tool to leverage when downsizing. According to the latest Homeowner Equity Insights report from CoreLogic (Q4 ’21), the average homeowner gained about $55,300 in equity over the past 12 months. Dr. Frank Nothaft, Chief Economist at CoreLogic, explains how important price appreciation and equity gains are for existing homeowners:
“Home prices rose 18% during 2021 in the CoreLogic Home Price Index, the largest annual gain recorded in its 45-year history, generating a big increase in home equity wealth, . . . For low- and moderate-income homeowners, home equity has historically been a major source of wealth.”
As real estate professionals know, as home prices rise, an owner’s equity does, too. So, many of your clients may have more equity than they realize because of the record levels of home price appreciation over the past year. Those equity gains could allow for a larger down payment on their next home, meaning a smaller monthly mortgage payment and greater financial freedom for them.
If you’re working with a client who has recently retired or plans to soon, then their needs are likely changing- meaning it may be the perfect time to downsize. Connect with them today to share some of the above data points and reinforce their options.