The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: johndoe on June 27, 2020, 07:26:18 AM
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Recently "for sale" signs in neighbors' yards have made me go to real estate sites and been impressed with what they're selling for. I know the prices online may not be totally accurate, but the properties are selling very quickly so they must be good offers.
Mrs. Doe and I are currently happy with our place, but I wonder what price it would take to make us sell and downsize. We're in our early thirties with no plans for children, and the home is 3br with 2 living areas and more storage than really necessary. If we moved it would be in a very similar location so commutes (both WFH currently anyway...who knows for how long), perks, etc. wouldn't really be significantly different either way. We plan on working and staying in this area for at least 20 years. The current neighborhood is mostly quiet and the people nearby are fine. Let's say there is no mortgage either way just for simplicity.
So I'm wondering how I should place a value on things like:
- new set of maintenance issues (would likely be an older house)
- older part of town (crime, noise, lose network of current neighbors, etc)
- moving (not all that enjoyable, although it does force a thinning out of junk)
What difference in sale prices would make you do it? $70k? $50k? $10k? I presume we'd just throw the extra money in index funds (which isn't exactly a sure bet right now, but that's another topic...) unless there is a better alternative you'd suggest.
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I hate moving, so if I were happy with the house and financially comfortable, I wouldn't move for the money unless it were ridiculous.
On the other hand, it seems unlikely that I would ever end up living in enough house to downsize. We are only in a two bedroom now because there aren't any smaller options in the neighborhood.
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What difference in sale prices would make you do it? $70k? $50k? $10k? I presume we'd just throw the extra money in index funds (which isn't exactly a sure bet right now, but that's another topic...) unless there is a better alternative you'd suggest.
I hate moving, so it would have to be an amount that would make a significant impact on my quality of life. Like, an extra year of savings or something like that.
We didn't go through the whole process of selling and buying a house, but we downsized earlier this year from a 3 bedroom apartment to 1. Money wasn't the main factor for us. In fact it was a lateral move, rent-wise, as we moved from the burbs into the city. Less time commuting, a more modern space, and less upkeep were the selling points. Overall we are much happier here than in our last place. Would it be the same for you if you moved?
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My recommendation is to do a ruthless purge of your junk as if you were moving. That way you will get a more accurate appreciation for how much space you actually need. That may motivate you further, or might result in realizing you need way less space than you even thought you did. Even if it doesn't, life is still better without junk and it might scratch the itch of changing your living circumstances without incurring the transaction costs of a move.
Another thing, is it possible to create a rentable space in your current house? Airbnb or even a regular apartment? That would be the functional equivalent of downsizing space but without incurring any of the listed downsides you mentioned.
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It's not about downsizing, it's about rightsizing. If that happens to be smaller and bring spare cash with it that's great. But living where and how I want is worth a great deal to me, certainly more than the spare cash I'd get for selling my current (and hopefully last ever) home.
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For me moving sucks. And that is with already being pretty ruthless about downsizing. Plus you have to include let's say 5k in moving cost and 20k in realtor costs (highly variable depending on purchase price). And as you said a while new slew of maintenance problems.
For me it would have to be in the above 50k range, probably more like above 75k.
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Depends on taxes too. If you can save 5k a year in taxes downsizing that is something to consider. If you have low property taxes, there is less incentive to move.
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We have a property that has doubled in value and is worth around $500K now. We are thinking of selling and will likely sell if we can find something suitable to buy.
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Where we live has everything we want. I planted 23 fruit trees, so we’re now self sufficient in fruit. We have enough vegetable garden to be self sufficient in vegetables too, if we wanted to. Views to die for. Two local shopping areas, with useful shops (most medical requirements, as well as the usual) except for a hardware store in easy walking distance. Lots of parks and sporting areas. Good walking. Schools. We’re not moving.
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We really like our location. We're blessed with quite a few great neighbors. We like our property and the house itself. It would take market value + an eye opening amount of extra money (six figures?) to make us toss our long term plans in the trash and try to find something similar.
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Well over $100K. $10K you're not even going to see any difference with all of the moving costs and unexpected expenses, particularly if it's an older home. If you aren't careful, it would even be easy to blow through $25K between moving and fix-ups and getting the new house into the same condition the old one was.