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When Is the Right Time to Downsize? 8 Signs the Time is Now

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Thinking about downsizing your home? A single-story cream colored home like this one could suit you

As we grow older, our needs and capabilities change, and not all homes are designed to support this change along with us. It’s common to upsize your home when your household is growing – whether to accommodate children, pets, or simply because you need an extra room for a home office. But what once was the perfect home, may now be too hard to manage and maintain in your golden years. 

There are countless benefits of downsizing your home, and it’s a wonderful way to open the door to the next stage of your life. But, making the decision to downsize can be hard, and leaving a home filled with cherished memories can bring heartache. So, when is the right time to downsize? If owning your current home has brought more stress and worry than it has joy and comfort in recent years, the time may be now. Here are 8 signs it’s time to put your house on the market and downsize.

1) Your monthly housing expenses have exceeded 30%

A general rule of thumb is to spend around 30% of your monthly budget on housing expenses. This includes your mortgage payment, utilities, maintenance costs, homeowners insurance, and property taxes. In fact, any household that spends above 30% is considered financially burdened. Stressing over finances can have an impact on your mental, emotional, and physical health, and having a little extra money saved up will help you be prepared in case any unplanned expenses or health issues arise.

Downsizing your home is a great way to lower monthly housing expenses because typically, a smaller home means smaller monthly housing expenses. Before you begin the home buying and selling process, be sure to calculate how much house you can afford on a fixed income. 

2) You have little leftover once bills are paid

The definition of retirement has changed drastically over the years. Now more than ever before, retirees are maintaining an active lifestyle that includes hobbies, exercise, and continued learning – and these all cost a bit of money. So how would you like to spend your time? Perhaps it’s joining a gym, taking painting classes, or taking a few college courses. If your monthly housing expenses are so high that you can’t enjoy your hobbies or activities, now may be the perfect time to downsize to free up some cash so you can spend it the way you want. 

3) Maintaining your home is becoming difficult

Our homes are filled with precious memories that we hold dear. The wall where you recorded your grandchildren’s heights, to the living room where your daughter first learned the piano. Our homes are reminders of the love and laughter we’ve shared with friends and family, and this leads many to remain in their homes longer than is wise for their health and financial stability. 

Limited mobility can prevent you from being able to perform general maintenance around the house, like yard work and regular cleaning. No matter your age, there will always be household chores that need to be done. But cleaning the gutters, vacuuming a two-story home, or mowing the lawn and trimming the shrubs can become more difficult as you get older. One of the many benefits of downsizing your home is you can choose a property where you longer need to worry about these chores. If you’ve reached the stage where these tasks seem impossible, it’s time to go smaller. And it’s better to make this decision sooner, rather than later. If household chores begin to pile up and if they impact the condition of your home, you may see a decrease in property value when it comes time to sell.

4) Your home has features that make aging in place difficult

If you’ve gained mobility restrictions as you’ve grown older, you probably made home improvements and modifications for safe and comfortable living. You’ve installed handrails, upgraded the lighting, and replaced your hard flooring for carpet. But depending on your layout, there may be some home features you’re unable to modify that still pose a threat to your safety and make aging in place difficult. Features like several flights of stairs, narrow doorways, or high-maintenance landscaping can all be safety hazards. If these home features have become obstacles for you, then now is the right time to downsize to a safer floor plan. A home designed for optimal accessibility, convenience, and safety is imperative to avoid falls and serious injuries. 

When considering downsizing your home, it’s also important to consider the weather in your area as snow and ice can be dangerous for someone at any age.

5) Your neighborhood no longer fits your lifestyle

If you’ve lived in your current home for countless years, you probably opted for a neighborhood that suited your lifestyle at that point in time. Maybe you chose a suburban neighborhood to escape city life. Or maybe you moved into a townhouse in the bustling city for an easier commute to work. These neighborhoods may have been ideal for your previous situation, but now they may no longer fit your needs.

You may find downsizing to a different neighborhood is what you need to fit your current lifestyle. Downsizing your home to a smaller one can reduce the amount of upkeep and free up your time for leisure activities, getting more rest, and spending time with family and friends.

A man and woman with their granddaughter after deciding that now is the right time to downsize their home

6) You want to turn home equity into retirement income

For most homeowners, equity is one of the most valuable assets, but sometimes your home may be too expensive to maintain. If your plan is to rely on home equity for income in retirement years, such as using a reverse mortgage, now may be the right time to downsize. Property taxes and maintenance costs may even be lower. Work with a real estate agent so you can sell your current home for the most money possible.

7) You have the option to live anywhere

The beauty of retirement is that you’re no longer tied to one location and can choose to live wherever your heart desires. This gives you the opportunity to look all across the US housing market for neighborhoods with the lowest property taxes, utilities, sales taxes, and more. So, if you’re wanting to sell your home in Vancouver, BC, and escape to sunny Sacramento, CA, or if you’re looking to be closer to family, the world is now your oyster.

8) Consider downsizing your home when several rooms go unused

It may feel like just yesterday when three bathrooms didn’t feel like enough, or when your grandchildren’s toys somehow managed to take over the entire house. At those times, you probably longed for a larger house to control the chaos. But, if any of the rooms that were once used are now rarely opened, it doesn’t make sense to pay to heat, cool, and light them. Saving money on utilities and property taxes are just a couple more reasons to think about downsizing your home.

Two women playing cards with eachother

Types of housing options for downsizing your home

So, if you’ve decided that now is the right time to downsize, it’s important to consider a number of factors while choosing between housing options. Mobility and ability restrictions, caregiving needs, location, and budget all play a large role. When you’re downsizing your home, it’s important to find a place that meets both your current needs as well as your future ones. Here are four main housing options to consider when downsizing your home.

  1. Buy or rent a single-family house or one-story condo. With home modifications applied as necessary, like bathroom grab bars or adding anti-slip mats throughout the home, you’ll be able to live independently for longer. If you’re still relatively independent or can get the level of help you need, perhaps meal delivery, cleaning services, or with the help of an in-home caregiver, staying at home can be a good option.
  2. Move in with a loved one. Being close to children and grandchildren not only creates a stronger bond with them, but it can also give you peace of mind in case any health concerns come up. Want more alone time? Consider adding a  tiny home to the backyard.
  3. Move into an independent living community. This includes senior housing, retirement communities, senior apartments, and active adult communities. The homes can be single-family houses, townhouses, apartments, or condos. They typically provide meal prep, transportation, housekeeping or maintenance, and health-related services. The community will often have recreational centers or clubhouses to give you the opportunity to connect with others and participate in community activities. You’re surrounded by people of similar age and interests and can enjoy the amenities and activities together. Since independent living facilities are aimed at older adults who need little or no assistance with activities of daily living, most do not offer medical care or nursing staff. You can, however, hire in-home help separately as needed.
  4. Move into an assisted living community. This is typically for seniors who can live somewhat independently, but require assistance for some daily tasks. Typically, the staff is available 24 hours a day, and meal prep, medication management, bathing, dressing, housekeeping, and transportation are all available. They also offer social groups and recreational activities.

In-home care services are also offered at various levels depending on the situation. In-home caregivers can provide help with day-to-day activities like cooking, grooming, or shopping, while also making sure you’re safe. 

There are many factors to take into account when answering the question- when is the right time to downsize? But keeping these 8 signs in mind can help you come to a decision that moves you into the next stage of your life with ease. 

Redfin does not provide health, legal, financial, or tax advice. This article is for informational purposes only, and is not a substitute for professional advice from a medical provider, licensed attorney, financial advisor, or tax professional.

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Real Estate

Kimco Realty Adds Weingarten Realty To Its Shopping Cart

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Empty shopping cart in the supermarket shopping mall

Today Kimco Realty
KIM
, one of the largest shopping center REITs in the US, announced it was merging with Weingarten Realty
WRI
for $5.9 billion in a mix of stock (90%) and cash (10%).  Each WRI share will be converted into 1.408 newly issued KIM stock plus $2.89 in cash per share and upon closing the combined entities will have an enterprise value of just under $20 billion.

Kimco and Weingarten are highly complementary as they own high-quality grocery anchored shopping centers, and the combined portfolio will consist of 559 properties in top MSAs.

One obvious benefit for Kimco is the fact that Weingarten’s portfolio is focused on coastal and Sunbelt markets that have performed relatively well during the pandemic. This merger creates significant synergies (around $30 million to $34 million) as the costs can now be spread across a $20 billion portfolio.

In addition Kimco expects to benefit from debt synergies, thanks in large part to the fact that Kimco is using most of its currency (90%) in stock and the balance in stock (10%).

I spoke with Kimco’s CEO, Conor Flynn and he explained that this merger will generate “lower leverage and enhance the long-term NOI profile” for the combined companies.

Kimco is currently rated BBB+ with S&P and Baa2 with Moody’s
MCO
and Flynn told me that the “next leg up is the A-rating” that the CEO is hoping to see in 2022 or 2023.

The cap rate on the Weingarten transaction should be immediately accretive and I view the 5.8%-ish cap rate to be extremely attractive and Flynn told me that “you can’t get that (cap rate) in the private market right now”.

According to Nareit data there are 18 shopping center REITs with a combined market capitalization of $52.5 billion. In 2020 the shopping center sector generated the second worst total return (-27.6%) behind regional malls (that returned -37.2%).

Although shares in shopping center REITs have rallied year-to-date (+26.1%) Kimco opted to purse Weingarten so it could use its cost of capital to transact the deal (purchase price was 90% in stock).

Another catalyst worth noting is Kimco’s  ability to drive NAV (net asset value) through a collection of mixed-use projects and redevelopment. The combined company has a potential of 41 projects that consist of 34 mixed-use and 7 master planned projects that include 1.7 million square feet in retail and 9,000 multi-family units.

Conor Flynn will remain the CEO of the combined company and Milton Cooper will remain as Executive Chairman. Weingarten will have one Kimco board seat. There is a break up fee of around 2.5% but I don’t anticipate another bid given the fact that it will take a large player like Kimco to execute on such a large transaction.

KIM closed up 2.31% and WRI closed +12.5%.

I own shares in KIM.

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Real Estate

Vacation Home Checklist: Keep Your Place in Perfect Shape

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Vacation home checklist items to keep in mind

Everyone loves a good vacation, and the option of having a private retreat is one of the many perks of owning a vacation home. With the soaring demand and interest in vacation towns and affordable suburbs, there’s no better time to jump on the opportunity to own a vacation home than now.

Whether you’re taking in the last snowy days at your retreat in Whistler, BC, or you’re looking to invest in a sunny escape in Fort Worth, TX, it’s critical to close up your vacation home properly at the end of the season to ensure your property is safe when you’re back at your permanent residence. To help you get started, this eight-point vacation home checklist will make it easier to maintain your vacant home while you’re away.

Vacation home checklist: what to keep in mind

A home away from home can be a great investment and a handy retreat for vacations. However, making sure you’re sustaining and securing your property during vacant months will help prevent potential problems while you’re away. These can include:

  • Frozen pipes and leaks
  • Downed wires
  • Fallen trees
  • Pests and animals
  • Mold
  • Theft and vandalism

Thankfully, there are steps you can take to prevent these potential issues from becoming a vacation homeowner’s nightmare.

Secure your vacation home

1. Install a home security system

Leaving your home unoccupied for a season could leave it more vulnerable to burglaries or vandalism. A home security system is your first line of defense when you’re away, whether it’s your vacation home or full-time residence, and will allow you to monitor your home remotely. Some security systems can also include flood monitoring or smoke detection, giving you additional peace of mind. Depending on the system you choose, some may even come with an automation function that will allow you to schedule lights or turn a TV on and off, giving the appearance of an occupied home.

Have sufficient lighting in your vacation home checklist

2. Make sure you have sufficient lighting

To deter opportunists from approaching your vacation home at night, illuminate walkways, entryways, windows, and any dark corners with outdoor motion-sensor lights to startle would-be intruders. Indoor lighting is also critical in ensuring your home looks occupied from the outside as well. Simple outlet timers can help turn lamps on and off at intervals to make your vacant home look occupied. Keep in mind that when using outlet timers indoors that you ensure it’s visible from the outside, even through curtains or shades.

3. Consider smart locks

An essential step in your vacation home checklist is ensuring all windows, especially those on ground level, and doors have secure locks. Alternatively, you may also consider installing smart keyless locks that will allow you to grant remote access to neighbors or housekeepers. These locks provide additional control, security, and convenience, and may give you better peace of mind knowing you won’t need to keep track of any keys.

4. Adjust any blinds or shades and secure the windows

The key to deterring any surprises while you’re away is to make your vacation home look as if it’s being regularly visited, so be sure to include leaving any blinds or shades partially open in your vacation home checklist. Doing so gives the impression that your vacation home is occupied, and those passing by will see the lights through the blinds at night without being able to see fully into the house.

5. Ask your neighbors for help

Getting to know your neighbors can offer another line of defense while you’re away. Instead of leaving your key in a well-known hiding spot, give a spare set to a trusted neighbor so that they have access to the home in case of emergencies. Plus, it’ll ensure that you have another set of eyes watching over your home for suspicious activity.

Assemble a team of professionals

6. Consider hiring a landscaping service

Untidy hedges, overgrown grass, weed-infested gardens, or even overgrown shrubbery are dead giveaways of an unoccupied home. While a lakefront home in Seattle, WA might not need frequent upkeep compared to a beach house with a large lawn in Orlando, FL, investing in a routine landscaping service to maintain your property while you’re away will keep up the appearance of it being regularly visited. Plus, trimming trees and shrubs around the house will prevent them from blocking views of the house and removes any hiding spots for burglars.

Secure windows and adjust blinds in your vacation home checklist

7. Invest in a quality housekeeping service to maintain your home’s interior

If you’ll be leaving your vacation home unoccupied for an extended period, adding a regular cleaning service to your vacation home checklist will make returning even more welcoming. In fact, your housekeepers will be able to deep clean the hard-to-reach areas that are usually left out when your home is occupied for the season – like laundering the curtains, cleaning air conditioning vents, and shampooing the carpets. When you return to your vacation home, you won’t have to worry about dust build-up or stale odors from your home being left unoccupied.

8. Find a reputable property management company

The final item on your vacation home checklist is to find a property manager. If you lack a flexible schedule or don’t live locally, a property manager can relieve the everyday stress of maintaining a vacation home from afar. Property managers act as the point of contact to manage your home and can conduct regular walkthroughs to ensure your home is protected. Some companies may offer seasonal services such as preparing your home for winter.

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Real Estate

Median Home Listing Prices Hit Historic High Of $370,000 According To Realtor.com

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Golden Austin Texas sunset over Cityscape

Median home listing prices hit a historic high of $370,000 according to Realtor.com. Recently releasing its latest Monthly Housing Trends report, realtor.com saw year-over-year median listing prices rise 15%.

While that’s good news for sellers buyers continue to compete in markets where multiple offers often come in six figures above asking price especially in those desirable California markets like Silicon Valley and Los Angeles. Competition remains stiff with 117,000 fewer homes “being listed each month compared to recent years,” according to the report.

In Silicon Valley recently there were 76 all-cash offers on a home as it went on the market according to CNN Business. A fixer-upper in Silver Spring, Maryland a Washington DC suburb boasted 88 offers, 75 were all-cash. Fifteen of those buyers had not even set foot in the home.

Realtor.com tracked the 50 largest metros in its data. Some metros saw those listing prices shoot even higher than the national average increase of 12%. Consider that Austin’s listing prices increased by almost 40%. Right behind it was Buffalo at 28.3% and Los Angeles with a 24.8% median listing price increase. Despite these price increases homes are selling a week faster than a year ago.

Listen to realtor.com Senior Economist George Ratiu. “The trillion-dollar question is of course how long can this continue? It’s the market reflecting typical economic problems.” Ratiu goes back to econ 101 on the law of supply and demand. “I do think as we move through summer sellers will be confident to list their properties as vaccination rollouts increase.”

The news gets even worse when you dig a bit deeper. Consider that nationally, the number of homes for sale in March decreased by 52% compared to March 2020. That’s even lower than this past February when inventory fell 48.6%. Crunch the numbers and that means there were 534,000 fewer homes for sale in March 2021 compared to March 2020 as we were just beginning the pandemic.

Since Austin is the best market in the country it’s no surprise inventory declined there 72.7% from last March. Other metros with strong declines included Jacksonville, Florida down almost 71%, and Raleigh, North Carolina where homes for sale fell 70.3%.

Here’s a deeper dive into realtor.com’s numbers. The supply and demand fundamental is evident in markets across the country. The Austin metro saw the year-over-year median listing price increase almost 40 % to $520,00. Median prices rose 18 % in Phoenix to $477,000. Raleigh once considered “affordable” had a 12% increase to a median listing price of $420,000.

“I think as mortgage rates creep up as well as home prices, we will see the number of people who can qualify for mortgages dwindling,” Ratiu forecasts. If that’s true then we may see a shift away from a sellers’ market. Now that could be good news for buyers.

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