When Is the Right Time to Downsize Your Home in California?
Sometimes, less really is more. Downsizing your home is a great way to save money, utilize space, and clear the clutter out of your life.
If you’re able to plan things right, you might even find yourself in a better situation than before. That might be a cheaper property in a better location or a newly renovated home with one guest bedroom instead of three. For anyone considering buying a smaller home, now might be the time to do it.
So, when is the right time to downsize your home? One of the most difficult decisions as a homeowner is deciding when to move on. Maybe you’re planning to retire soon, or your kids just left for college, and you’re considering the cost savings of a smaller home.
It can be challenging to move out of a larger home filled with memories. But what you may not realize is that you’re missing out on significant savings and, if you have the right help, an upgrade to your current living situation.
There are a few reasons to give some extra consideration to downsizing if you live in California. Aside from the fact that the median price for a single-family home was almost $550k in 2018, California residents are subject to famously high property taxes, mortgage payments, and a generally high cost of living. Whether you’re considering a different state, a rental unit on the beach, or a smaller home in the desert, here are a few questions to ask yourself when you feel it might be time to downsize.
1. Do I have more than one guest bedroom?
Too much extra space can be a hassle. An excellent way to gauge your extra space is the number of spare bedrooms in your home.
If you have more than one or two regularly empty, it might be time to consider downsizing! Unused rooms become wasted space. The same goes for storage. If you use your guest rooms for storage, it may be time to do some spring cleaning.
2. Do I need all this space?
The property size itself can also be a determining factor. Decide whether or not your square footage is reasonable for your needs. A larger residence can mean higher property taxes (which we’ll get into shortly), leading to more housing costs on your end.
3. Can I find something better?
Homeowners often decide to downsize after finding a new opportunity, and in these cases, they want to act fast. If you’re considering downsizing to a smaller space, start looking at homes that fit your ideal budget. It’s a great way to gauge whether or not it’s the right time to move out of your current home.
The real estate market fluctuates pretty often, so decide what you’re hoping to get out of a downsizing sale – a high sale price for your home or a low buying price for your move? In the right market, you can get both.
Doing preliminary research will also help you determine your wants and needs if you decide to sell your home. Tour some open houses to get a feel for what you like and don’t like. You might even find out that your current situation has everything you could want. But it can’t hurt to start looking.
4. What about California property tax?
Californians spend a lot on their property taxes. Though our average statewide tax rate is below the national average, the relatively high cost of real estate can bump up your yearly taxes quite a bit.
How much am I spending on property taxes?
Yearly property taxes vary by county. According to SmartAssett, Orange County residents pay 0.69%. In Los Angeles County, that number jumps to 0.72%, and in San Diego County, the rates rise as high at 0.73%. Considering the high price of real estate in California (particularly in areas like Silicon Valley, Southern California, and Monterrey), your property taxes could end up costing you thousands each year.
Would that change if I decide to move?
Let’s say you purchased your San Diego home for $1.5 million in 2002 – that means you’re spending approximately $11k each year on property taxes. Deciding to move to a smaller home or even to a rental can end up saving you thousands. Put those savings into something new.
Will I qualify for tax breaks?
If you have a capital gain from the sale of your primary residence, you may qualify to exclude up to $250,000 of that gain from your income under the IRS Section 121 exclusion. If you file a joint return with your spouse, that number jumps to $500,000. The only qualifying factor is that you’ve been living at the address for at least 24 months over the past 5 years.
5. Am I ready to sell?
Do you feel ready to part ways with your home? Don’t push for a move if you don’t feel confident in your decision. There is no right way to move, so do some research on the housing market in your area. Then, decide how you want to sell your home.
These days, there is an abundance of options that eliminate realtor fees altogether. Sell your home when you feel ready and when you’re prepared to take that next step in your life.
6. How can I downsize my belongings?
As you prepare for your move, keep in mind that you’re choosing to have less space and, therefore, less storage. Take the move as an opportunity to donate your unused belongings and start the new chapter of your life with less clutter. If you have adult children, ask them to pick up or donate any leftover belongings. Aside from our cash sale offers, Blueprint Homes helps with decluttering and downsizing by assisting with donations to local charities like Goodwill and Salvation Army.
Finding the Right Buyer
Moving is a big step. Finding a buyer who understands what you’re going through is essential. If you’re thinking about how to downsize your home, Blueprint Homes can help. With simple cash offers and no need for a real estate agent, we can get you paid and on your way to a more affordable and practical home that suits your needs.
Our flexible escrow period means you can have as much time as you need to find your next home. We have a team of experts that can answer all of your questions about our cash sale program, California property tax and discuss whether or not it’s the right time for you to downsize. Contact us to learn more.