The deets on downsizing on Long Island | Newsday

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Are We Heading Towards Another Housing Bubble? NO!

Are We Heading Towards Another Housing Bubble? NO!

One of the causes of the housing bubble 10 years ago was the increase of housing inventory to a 10-12 month supply. This over supply caused prices to fall. Today we have a 4.4 month supply of homes for sale, nowhere near the amount we had pre-bubble! Let’s chat about what that means in our market!

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Retiring Soon? Should You Downsize Your House?

Retirement is a time of major change in your life. For many retirees, one of those changes involves leaving their home.

Downsizing to a smaller house is popular among retirees for lots of reasons. You may not need such a large home after your kids have gone, taking care of a big property may be a major hassle, and you may want a home without stairs for health issues.

However, if downsizing isn’t a matter of necessity for you, you’ll have a choice to make: Stay put, or pack up and move. There are pros and cons to both options that you should consider.

The advantages of downsizing your home as a retiree

Some of the big advantages to downsizing include the following:

  • You could reduce or eliminate your mortgage: More than 4 in 10 older Americans responding to a recent survey conducted by American Financing indicated they still owed money on their mortgages in retirement, and 17% said they didn’t think they’d ever pay off their mortgages. If you still owe on your home but could downsize to a cheaper house that’s paid in full, or has a much smaller mortgage, you could significantly lower your housing costs. Spending less on housing means you can reduce the amount you withdraw from investments — or have more wiggle room in your budget.
  • You could reduce other housing costs: If you downsize to a smaller and cheaper home, not only can you cut your mortgage costs, but other expenses are likely to be reduced as well. Your property taxes should be lower on a cheaper house, for example, and your utilities should be less if your new home is smaller. The average annual increase on property taxes is typically much greater than the average annual increase in Social Security benefits, so when you’re living on a fixed income, keeping property taxes as low as possible is essential.
  • You could pick a more strategic location: When you sell your existing home, you could pick a place for your new one that makes your cost of living cheaper in other ways besides just reducing housing costs. For example, you could move to a state that doesn’t tax Social Security if your benefits are currently taxed. Or, you could move somewhere more walkable so you could get rid of at least one of the cars in your household.

Reducing monthly costs by downsizing could mean the difference between your nest egg seeing you through to the end of your retirement, or running out of money early — so it’s something to seriously consider if you’re afraid your cash won’t last.

The disadvantages of downsizing your home as a retiree

Although there are clear advantages to ditching your big house for a smaller one, there are also some big downsides as well. For example:

  • You may not actually save as much money as you think: According to the National Association of Realtors, the average homeowner between the ages of 65 and 74 who decides to downsize will sell a home for $270,000 and buy a new house for $250,000. That’s because demand for smaller homes is high, and retirees are competing with first-time homebuyers looking for starter homes. If you can only reduce your housing costs by around $20,000, it may not be worth the effort.
  • Moving can be expensive: When you sell your home, you typically must pay commission to your real estate agent and the buyer’s agent. You’ll have closing costs to pay, and moving expenses. This can eat up any savings that come from downsizing.
  • You could lose your sense of community: Maintaining social connections is essential to staying healthy in retirement. If you’ve been living in one place for a long time, you likely have friends in your neighborhood, know your local restaurants, and have places in the community where people know you. Moving and giving up your established social connections could make it much harder to enjoy your post-work life.
  • You may be sorry your new house is smaller: According to recent census data, one-third of young people between the ages of 18 and 34 lived with their parents in 2015, and more young people lived with parents in 2016 than with spouses. If you downsize, and your kids decide to come back home, you — and they — may be unhappy with the fact that you’re stuck in closer quarters.

Think through these issues carefully — and do the math — before you list your home, so you don’t end up doing something you regret.

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Rising Home Prices Help Build Family Wealth


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5 REASONS To Sell Your Home this Fall


autumn autumn colours autumn leaves background

Have you been thinking about putting your house on the market? What about moving-up to the house of your dreams? With supply and demand continuing to raise prices, now may be the perfect time! Let’s get together to discuss why you should list your house for sale this fall!

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NAR Reports Show It’s A Great Time to Sell!

NAR Reports Show It’s A Great Time to Sell! | MyKCM

We all realize that the best time to sell anything is when the demand for that item is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that right now continues to be a great time to sell your house.

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What Does the Future Hold for Home Prices?

What Does the Future Hold for Home Prices? | MyKCM

Home prices are at the top of everyone’s minds. Can they maintain their current pace of appreciation? Will rising mortgage rates negatively impact home values? Will the next economic slowdown cause prices to crash?
Let’s try to answer these questions based on what has happened in the past as well as what we know about the current real estate market.
The Impact of Rising Interest Rates
We explained earlier this year that rising mortgage rates have not negatively impacted home prices in the past and probably wouldn’t this time either. Freddie Mac’s comments were very direct:
“In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”
They were correct. So far this year, home values have continued to appreciate above normal historic percentages and it appears the gradual increase in rates has had little impact on prices.
The Impact of an Economic Slowdown
Many people fear that when the economy turns, we may see the same depreciation in home values as we did a decade ago.
However, we recently reported that the same group of economists, real estate experts, and investment & market strategists who predicted the next recession will occur in the next 18-24 months have also projected that house prices will continue to appreciate for the next five years, albeit at smaller percentages.
It Comes Down to Supply and Demand
As always, home prices will be determined by the demand to purchase compared to the available inventory of homes for sale. For the last six years, demand has far exceeded the available supply which has resulted in the average annual appreciation to top 6% since 2012. That is far greater than the historic norm of 3.6% annual appreciation that we saw prior to the housing boom.
There are currently small signs that housing inventory is slowly beginning to increase. Months supply of houses for sale matched last year’s numbers for the last two months after 37 consecutive months of decreasing inventory. New construction data has also shown positive signs that inventory will be increasing.
As inventory begins to meet demand, we will see appreciation return to more normal levels. We are already seeing projections coming in lower than the 6.2% annual average we have seen more recently.
CoreLogic is predicting that home values will appreciate by 5.1% over the next twelve months and the Home Price Expectation Survey calls for values to increase by 4.2% in 2019.
Bottom Line
Mark Fleming, Chief Economist at First American, explained it best:
“We’re seeing the first indications that price appreciation may be slowing, but the underlying fundamental housing market conditions support a natural moderation of house prices rather than a sharp decline.”

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