When Is It Time To Downsize Your Home?
- Timing the downsize
There are always several clear indications that it is time for you to move on to a smaller property. It has traditionally been seen as an option when the task of maintaining, repairing, cleaning, and heating a large home becomes too onerous. Whether you are looking at lowering the costs of homeownership (due to rising interest rates) or becoming bond-free, or reassessing your property needs once your offspring have flown the nest, broaching the subject of downsizing sooner rather than later could save you a lot of trouble.
Downsizing is a common trend among older homeowners and the majority do so before age 65. This might seem young, but moving home is known to be one of the most stressful life experiences, so you want to do it when you are fit and able. But downsizing is not just an option for the elderly or people with health issues. It could be the answer if you want to raise capital to clear an outstanding home loan or other debts or, for example, provide a deposit for a child's first home or pay for a child's expensive tertiary education.
Downsizing enables you to release equity from a larger family home that has risen in value, swapping this for something smaller, and more manageable in retirement. This can provide a welcome financial boost an increase your cash flow, alongside the opportunity to reduce day-to-day running costs. Anyone contemplating downsizing should know that the process is not simply a matter of phoning the property practitioner (estate agent) and hiring a removal service.
If you are thinking of downsizing and have done your figures to make sure it works for you, the next thing to decide is what to do to make your house more desirable to buyers.
- To redecorate or NOT?
With a bit of TLC and home improvement, a property's value can easily increase substantially. In the face of financial uncertainty, especially when the property's value has increased, a resale will allow you to benefit greatly.
People often think they need to redecorate and tackle all the big projects they have never quite got around to do. Spending a small fortune on a new kitchen or bathroom or even on an extension - even if you think your house needs some or all those things, could mean that you will not recuperate it when selling your property, as every buyer will want something different.
If the property needs major spending and reconfiguring, it is advisable to pay for a set of drawings from an architect and have the building plans approved. That way, you show potential buyers what they could achieve, but you do not have to pay for the work.
The best return on "redecoration investments" is improving the property's curb appeal - as it is the first thing prospective buyers will see: the entrance and front elevation. Both should be painted, and gates and fencing should be repaired if necessary and treated with preservative. Weeding the flowerbeds, cutting the lawn, and hanging some flower baskets or displaying groups of various-sized flowerpots confirms the perception of a well-cared for property.
Any clutter, inside or outside, should be cleared out and sent to an NGO or a charity shop, as the property needs to be very clean and tidy.
You are showing the buyer that you love and look after your home, even if it is old and does not necessarily follow the latest property trends. Neat and well-maintained older homes give buyers the benefit of being able to put their own design stamp on it - according to their own time frame and within their budgetary constraints.
3. By how much should we downsize?
3.1 Rightsizing
If having a "big as possible" house you can manage is not important to you - but rather lifestyle related things, then the more specific you are about what is important to you and what you want to experience in your live on a regular basis, the simpler the property solution will be and the quicker you would right-size a lifestyle property that uniquely fit you.
The layout and location of a property is most of the time much more important than the size of a house. If you take the time to find a layout that works for you, the size is usually secondary. If the neighbourhood and location is good and close to things you find important, then the value is greatly enhanced.
3.2 Competing with first-time buyers due to price bracket
Although you might get a good price for your current home, downsizing too much could bring you in direct competition with first-time buyers. The number of first-time buyers stepping on the property ladder grew to more than 50% of all buyers in 2021 - due to the big decrease in interest rates.
The average cost for properties bought by first-time buyers was R1,150,256 in Q2 2022, which was 4.2% higher than a year ago - R1,104,351. If you would be buying property in the same price bracket as first-time buyers, expect to be confronted with a shortage of properties available to buy. The size of your deposit or the fact that you might be buying for cash will be a huge negotiating factor which you can use while searching for a suitable property.
For downsizers, this could mean that more of the proceeds from their property sale are eaten up by the cost of buying their new home. This includes legal, and estate agent fees, not to mention a higher transfer duty due to a higher priced property.
4. Less is more
The larger your home, the more you need to furnish and maintain it. The smaller your home, the lower your utility cost should be to cool, heat or light it up. You will also be able to add a number of energy saving features (like solar) for much less than for a bigger house - that could practically eliminated your energy cost. Taking the time to carefully furnish and decorate a smaller house with fewer things "that you need", frees you up to focus on those things that will improve your lifestyle.
Homeowners often face the fact that they are not using as much of their home as they used to. Our needs and priorities change over time, and along with them, it makes sense that our property should too.
When downsizing due to unused space, homeowners have the option to either move to a smaller property or to restructure their current home into something smaller, remodelling the unused space into something useful, like an office or a rental apartment. These options will be dependent on how your needs and priorities in life changes.
5. Where should I move to?
5.1 Type of property
Move to somewhere practical and do not let your heart rule your head. That apartment on the second floor or the little seaside cottage with stairs is going to be much less suitable when you turn 80. Likewise, how would you manage a big garden in old age? Can you afford a gardener, or will the garden go to ruin, devaluing your property? Is the location suitable if you can no longer drive to the closest shopping centre?
Downscaling generally means less clutter and usually allows for more free time. Moving into a smaller home, forces one to do a thorough clear out, getting rid of any unnecessary items. Smaller homes, particularly sectional title properties, have smaller gardens (or in the case of an apartment, no garden at all) and are usually simpler to maintain.
If you want to move to a townhouse or a cottage for the ease of living on one level, you may find these are in short supply and competition for them could be fierce. Retirement villages are another option to explore. Look at how much space you will actually need - are there larger pieces of furniture you want to take with you? Will you need larger rooms to fit them? Also think about any guests you many have - will you need one or more spare rooms? - or just some space to do hobbies?
5.2 Which Suburb, Town or Area?
A common way to downsize is to sell up and move to a more affordable suburb or region, where property prices are lower. However, you want to ensure there are friends and family nearby. Relocating to the countryside may appeal but, as you age, getting around could become problematic so you need to ensure there are transport options. The quality of internet access - especially the presence of a fibre connection or not, will not only complement your lifestyle but will also be a non-negotiable requirement for future buyers of your property.
Also consider your proximity to shops, a doctor, and any entertainment or sporting options you might want and need. As time goes on, you want to ensure easy access to local amenities.
Think carefully about the area you want to move to and the kind of home you want. You may end up paying a premium for a home in an area with good public transport links and fibre connections, that is close to shops, doctors and hospitals. Also, retirement hotspots such as Hermanus, Kleinmond, Langebaan, Mossel Bay, Strand and other well-developed seaside towns are all commanding higher prices. This could mean you end up spending more on your new home - especially in the Western Cape relative to what you are used to paying in e.g. Gauteng and Kwazulu-Natal.
Certain careers continue to demand strenuous travel and time away from home. When a homeowner's career demands that they spend most of their time away from their home, it may a good idea to think about using the money you spend on a large home on something more simplistic, but in an area which offers a better lifestyle for the times you spend there, investing the additional funds in other avenues.
6. The emotional side of downsizing
If you have lived in your family home where you brought up your children, downsizing can be a very emotional time. The emotional fallout of moving meant, not only saying goodbye to the trappings of many years of family togetherness, e.g. children's toys or old music cd's / records, inherited family furniture, but also finding out that nobody else values or wants it.
When moving into a new place with new furniture, the absence of old family home furniture which was part of your family, will also upset your other family members - as "coming home" has a new meaning and "look".
Calling the change a "downsize" focusses on sacrificing and giving up, which is negative - making the idea of downsizing as "something must be wrong" and you are only doing it because you have to do it. Downsizing should always be a conscious choice for a better lifestyle that more closely fits you and your family in the best way possible.
It has nothing to do with constant striving toward more or bigger, or putting yourself at risk with unsustainable debt. It has also nothing to do with stressing yourself to outdo the Jones's (neighbours, family or colleagues). Instead, it is about being honest with yourself enough to figure out what you are spending money on and whether that money is worth the time and effort you invest in it. Best of all, if downsizing brings to your life meaning and allows you to sleep well every single night - then you have in fact "rightsized" it.
Homeowners who have successfully downsized sometimes appear happier when they are no longer overwhelmed by the demands of a larger home.
7. What should I do with my possessions and furniture?
Moving out of a larger family home to a smaller property inevitably means parting with a lot of possessions. Measure items and work out what you have got room for in your new home, and then decide what to do with everything else. There are several options. You could give items or furniture to your children, family members or friends. However, if you think you might be able to fit more than you think in your new home, putting some items in storage over the short-term is perhaps wise.
Declutter as much as you can. It makes sense not to pay a removal firm to shift items and furniture that will ultimately end up in the charity shop or the local dump.
Do not get carried away. The only thing worse than paying to remove and store old junk is finding you have parted with a treasure. Take your time over sorting out your belongings.
8. Planning for the Golden Years
While we all want to stay at the peak of our health for the rest of our lives, you must be realistic about growing older and the limitations of your living conditions. Multiple flights of stairs and steep driveways, for example, are not items you will want to face every day for the rest of your life. Planning and downsizing before your current home stands in the way of your enjoyment of life is always a good idea.
Downsizing is often an unavoidable part of homeownership, but it is a change that most often helps homeowners find a new happiness that suits their lives better. When downsizing, however, it is important to assess your needs carefully as you search for your new home.
To do this, it is best to get support and guidance from a trusted property specialist to help you make the best decision for the next chapter of your life.