I was talking to an 84 year old client and she has decided that it is not prudent for her to continue to live alone in her current house which is way too big for her now. She asked if she should consider selling her home of 35 years in the current housing market. As with many questions, the first answer is often “It depends”.
1)Timing: If she is going to definitely move within the next 2-3 years, now is probably as good a time to sell as anytime soon. Nobody knows what the housing market will do in the near term future, but there isn’t a lot of hope for a positive change soon. And with prices in most areas declining, selling sooner would seem better than selling later.
2)Equity: Since she has owned her house for many years, she probably has a significant amount of equity built up in her home. Three years ago, home equity seemed to be a great place to hold your assets. But that isn’t true now and a good financial planner could assist her in taking the proceeds from selling her home and investing in much safer income-producing assets.
3)New home: And where she intends to live after selling her home will affect her decision. If she wants to downsize to a smaller, single story, ground level condo, then she needs to also work on the issues of buying a new place, and now is a great time to do that. But if she is planning to move into a Senior Community, then financial stability and investment cash flow numbers need to be worked out.
And things like capital gains tax and tax base transfer all need to be considered.
Let me know if you have any related questions about selling your home.
Tom
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