Is It Time to Downsize, Even in a Seller’s Market?

SAN LUIS OBISPO SELLER MARKET

A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their house in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country including San Luis Obispo and Santa Barbara Counties are currently experiencing a seller’s market.

In a recent blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

  1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
  2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
  3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in a recent article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help. 

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profit from the sale of their current home and splitting it in order to put down payments on a smaller home in their current location, as well as a vacation/retirement home where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values. This makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 72.6% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about. 

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, let me know so that I can help guide you through the process to your next home.

Top 10 Luxury Homes For Sale in San Luis Obispo, CA

We picked out the top 10 luxury homes for sale in San Luis Obispo, Ca! From Modern Farmhouse to Classic European to Vintage Spanish Style Homes these properties have it all. From Downtown SLO living to peaceful country acreage, you’re sure to fall in love with these homes. Check out how the elite of San Luis Obispo live and who’s looking to sell!

 

#1 – 951 Pasatiempo DriveSan Luis Obispo, CA 93405 | Listed Price $3,250,000

951 Pasatiempo Dr San Luis Obispo

 

#2 – 4950 Davenport Creek RoadSan Luis Obispo, CA 93401 | Listed Price $2,850,000

Davenport Creek San Luis Obispo Home

 

#3 – 1650 Harmony WaySan Luis Obispo, CA 93401 | Listed Price $2,699,000

Harmony Way San Luis Obispo Home

 

#4 – 6970 Canada VistaSan Luis Obispo, CA 93401 | Listed Price $2,495,000

Edna Valley Home For Sale

 

#5 – 672 Oakridge DriveSan Luis Obispo, CA 93405 – Listed Price $2,395,000

Oakridge Drive San Luis Obispo Home

 

#6 – 550 BassiSan Luis Obispo, CA 93401 – $2,325,000

Bassi Ranch San Luis Obispo Home

 

#7 – 7175 Paseo VinedoSan Luis Obispo, CA 93401 – $2,295,000

Paseo Vinedo San Luis Obispo Home

 

#8 – 875 GreystoneSan Luis Obispo, CA 93401 | Listed Price $1,995,000

Greystone San Luis Obispo Country Club

 

#9 – 1190 Bassi DriveSan Luis Obispo, CA 93405 | Listed Price $1,999,000

Bassi San Luis Obispo Home

 

#10 – 1443 Osos StreetSan Luis Obispo, CA 93401 | Listed Price $1,845,000

Osos St Downtown San Luis Obispo Home