Jan 27, 2021

Right Sizing Your Home - Dealing With Life Events

Very often young people will buy their first home, whether single, married, or just living tenants in common when they are tired of paying rent.   It is a wise move because homeownership begins the wealth ladder.  In general, real estate appreciates over time; though there can be up's and down's in any market.  Buying a home should never be seen as a short term investment.  And, buying at the top of a market can be really perilous because if there is a downturn, it could take years to rebound.  In any case, a first home is usually a starter home or condo.  Perhaps 1,000 - 1,500 square feet, but certainly enough for someone who is single, or a young couple.   

When the stork visits and the first baby is born, life changes forever.  It is not so bad from a space requirement until the child is two or three.  The first home could still work; but when baby number two comes along, the space that worked just fine for a young family all of a sudden is just too small.  That is when Right Sizing starts to be a discussion.  Buying a home that will be big enough for a growing family preferably in a good school district now starts to make sense.  The only question is how big.  It might be that home number 2 is a ten year plan.  Just maybe there could be a home number 3 that is bigger later on to accommodate a home office and the needs of older children.

The good news is that eventually those children go off to college and with some luck never to return home again.  Though based on the economics of the moment in recent years we have seen kids come back home after graduating from college.   But eventually, Mom and Dad will be empty nesters so that now that 4,000 square foot home is just too big for two people.  So in this case Right Sizing is about Down Sizing.  Maybe 2,500 to 3,000 square feet is enough to provide a home office and good entertainment space until retirement.  Speaking of retirement, down sizing could be part of a couple's retirement planning to take money tied up a bigger home and invest it in a mutual fund, or some other stock investments to begin planning for those retirement years when income will be necessary to supplement Social Security.  

Right Sizing is all about life events over a 40 or 50 year period.  The odds are that most people will live in 4 or 5 homes that reflect their needs along the way.  The notion of a "forever" home is not too likely because things change.  At Paragon Home Resources, we assist families during all stages of life; buying the first home, Right Sizing, empty nesters, people moving to retire, people moving into senior living and families dealing with end of life issues.  We can speak to all the issues that come up based on our client's stage of life because we assist with life decisions.