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Is Now the Right Time to Downsize Your Home?

when to downsize your home

Is Now the Right Time to Downsize Your Home?

Many Americans choose to downsize their lives as they approach retirement by selling their house, switching to a more economical car, or selling unused antiques that were taking up closet space. This can be an excellent retirement strategy as it allows a person to declutter their lives, boost their savings, and eliminate debt as they prepare for their future. If you are thinking about downsizing your home, the retirement phase experts at Crash Proof Retirement® have a few reasons why 2021 could be the perfect time to execute this retirement planning strategy.

High Demand for Single-Family Homes

The housing market is experienced a frenzy in July 2021, pushing prices to record highs which could work to your advantage if you are looking to sell. Investment firms and other buyers were purchasing houses as quickly as they went on the market, and they were willing to pay more than the listed price of the home. Last month, we reported that this housing market boom could be short lived, and that prediction seems to have been accurate. Many sources are reporting that July’s hot housing market is starting to cool off, so if you want to cash in on inflated home values and downsize for your retirement, now could be the time to act.

Mortgage Rates are Historically Low

There are many reasons why the housing market is so hot right now and one of them is that mortgage rates dropped to historic lows in the wake of the 2020 market crash and pandemic recession. Just like they did in 2008, the Federal Reserve severely cut their benchmark interest rates when the COVID-19 pandemic caused the stock market to plummet in March of 2020. This strategy proved to be effective in giving consumers easier access to credit and boosting the economy by encouraging consumer spending; however, after a year and a half since rates were cut, the Fed is squeamish about raising rates again. 

If you are looking to downsize your home, average mortgage rates are currently hovering below 3%, which means buyers could be more inclined to overspend on a new house due to inflated home prices. While the Fed has chosen to keep rates where they are for the time being, they have discussed slowly bringing COVID-19 stimulus measures to an end, which could cause rates to increase.

Selling Your Home Now Could Protect You from a Housing Market Crash

Although housing prices reached record highs in July 2021, prudent investors knew it would not last forever. If home values were to decline over the next several years (and it seems likely that they will), Americans paying expensive mortgages could easily see the value of their homes depreciate. Obviously, that is a less than ideal scenario for anyone, especially for people who are in or near retirement. If your retirement income will not be able to cover your current mortgage, downsizing could be the perfect way to get out of your expensive home before the next housing market crash.

Developing a Crash Proof Retirement® Strategy

Even though the stock market and housing market have rebounded from the 2020 crash, investors in or near retirement need to exercise caution, especially during this time of rising inflation. Another crash could be right around the corner, and downsizing your home is just one strategy that you can consider using to protect yourself, your family, and your investments. If you would like to find out more about whether downsizing is right for you and learn about other strategies that will help Crash Proof your Retirement, scheduling to meet with one of our licensed educators can sure up your financial future with the Exclusive Crash Proof Retirement® System. Using our proprietary Crash Proof Vehicles, you can guarantee the protection of your principal with no market risk and no fees, all while avoiding the financial calamity of an uncertain and volatile housing market. For more information about how you can Crash Proof your Retirement: Call 1-800-722-9728 or visit crashproofretirement.com and fill out the form on our contact page to schedule an appointment with one of our licensed retirement phase experts.

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