Most empty-nesters eventually want to downsize and many are exploring their options. For most, the issue isn’t a matter of if, but when. Its both an emotional and financial decision that on a scale of 1-10 rates an 11 on life-changing events.
Complicating matters is an underlying issue that often takes empty-nesters by surprise. What they are finding is that even though their home is rising in value, the housing recovery has been very uneven and often not working in their favor.
The reason for this was discussed at length in the blog post Downsizing in Style. In a nutshell, the millennial generation does not share the boomer/X affection for the car-dependent suburban lifestyle. This has resulted in a market where the price increases for the condos and townhouses that boomers want purchase are outpacing the appreciation rate of the homes they want to sell.
Quite a few potential downsizing couples are playing a waiting game in the hopes that their home values will catch up with the condo market.
If you are an empty-nester that is holding fast, waiting for that pop in prices you feel is sure to come, you may have to consider the possibility that it won’t happen. After all, the bottom line is not where values have been, but where they are going. In some cases, biding your time may be worthwhile. In other cases, that burst of appreciation is very unlikely to happen. In the latter case, waiting could well decrease your buying power as condo prices continue their upward trajectory.
The fact that the millennial generation does not share the GenX/Boomer love affair with outsized suburban homes in car-dependent neighborhoods has been a major disruptive force. Times and lifestyles have changed. People are working longer and harder and the lifestyle they are seeking reflects that reality. Less is more in terms of size and time is at a premium.
Empty-nesters need to take a cold dispassionate look at how desirable their homes and neighborhoods are in the eyes of millennial buyers. Here are some warning signs that fall into two basic categories:
Just yesterday, I read a post from Inman News about how millennials are moving to the suburbs in increasing numbers. Yes, the movement is real and it will help the housing market for single family homes overall, but there are many caveats. An interesting point in the comment thread sort of summed things up:
I think a better title for this post would be “Millennial home buyers forced to the suburbs because industry fails to address affordability issue in the urban areas they most prefer.”
Sarah Schnell Jones
Millennials prefer city life. They are being dragged kicking and screaming to the suburbs often because of financial necessity. When they do move, they want a lifestyle as close to city life as they can get. This drives their preferences for neighborhoods and also has consequences down for how cities are developed and which neighborhoods receive attention from developers and local government.
Millennials aren’t interested in hopping in the car every time they need a quart of milk. They want to stroll to the corner store. At the very least, they want to have a walkable downtown area within a couple of miles where they can park and walk to a nice mix of stores, restaurants and entertainment.
The market has not been kind to homes that have poor access to a Metro-North station. Millennials want to be sure their access to the city is easy. A difficult parking situation at the train stations can tack on an additional 15-20 minutes to each side of a NYC commute. That’s a deal-killer to many young home buyers who are craving some work-life balance. If spots aren’t available at the train station or the wait list is as long as Rip Van Winkle’s beard, it becomes a problem that can impact home values.
If you have read my blogs or newsletters that are directed to home buyers, you will know that I tell buyers to look for neighborhoods where there is active interest in development. When there is a major commitment to growth, growth is what you will get. If there is no such commitment, then the area may be status quo for a while, but if left on autopilot for too long, a neighborhood will eventually decline.
These quantum shifts in desirability are turning some prime locations into areas where benign neglect is the order of the day. Further, zoning issues have become up for grabs in some areas which can result in a hot mess if there is a lot of undeveloped land in a neighborhood. Inappropriate development can be worse than no development.
People who live in these neighborhoods are often in denial because they are accustomed to top-drawer treatment from their municipality. The notion that their neighborhoods are no longer a priority is foreign to them. However, this is happening in quite a few communities and residents who are thinking of selling need to be savvy to these trends.
If your are looking to a big burst of appreciation in order to cash out when neither developers or your local government is showing interest in your immediate neighborhood, then you may need to rethink the waiting game.
It is true that many suburban areas are hot markets right now where homes fly off the shelf the minute they come to market. Those homes are located on a rather small slivers of real estate that meet the needs of the millennial generation sited above. If you own a home in one of these areas and can add award winning schools with high test scores to the package…CONGRATULATIONS! You’ve hit the trifecta! For the rest of suburbia, its a more complex situation.
Your home may appreciate due to the bull housing market, but if you are looking for a walkable downtown to relocate to, waiting may well be decreasing your purchasing power. Also, as unfair as it seems, homes that are struggling to regain their footing during a boom will be hit first and hardest should there ever be another housing recession…
Its all food for thought.
© 2016 – Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
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