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Friday, August 30, 2024 • B3
THE GARDEN ISLAND
Pros and cons of downsizing your home large home with energy-efficient appliances and lighting can be expensive, as are new windows and upgraded insulation. If you’re eco-minded, it may just be easier to live in a smaller space.
Andrew Dehan BANKRATE.COM It’s not just retirees choosing to downsize — with today’s elevated housing costs, many people are looking to smaller properties for relief. In fact, 44 percent of U.S. adults who would be willing to make a sacrifice to find more affordable housing say they would consider downsizing their living space, according to Bankrate’s 2024 Home Affordability Report. But living smaller comes with its challenges. Let’s weigh in on why people may want a smaller footprint, as well as the benefits and drawbacks of downsizing your home. ZACK WITTMAN / THE NEW YORK TIMES
Why buy a smaller house? The short answer is, to save money: High mortgage rates and even higher home prices are two major reasons people look to buy a home that’s on the small side. A lower price tag on your house means borrowing less money to make the purchase and paying less interest over time. But location is another reason people may choose to live smaller. Many people will opt for convenience, abundant amenities and a shorter commute to work over more square footage. “Usually, it’s more expensive to be closer to a big city,” says Maggie Johndrow, partner and financial advisor at Johndrow Wealth Management in Connecticut. Living with a smaller footprint can have many benefits, both for your finances and your lifestyle. Reduced expenses Opting to live in a smaller
U.S. 30-year mortgage rate falls to lowest level in 16 months Ann Saphir REUTERS The interest rate for the most popular U.S. home loan slid to its lowest in 16 months, after Federal Reserve Chair Jerome Powell signaled the central bank was ready to lower borrowing costs next month to keep the job market from weakening further. The average contract rate on a 30-year fixed-rate mortgage fell 6 basis points in the week ended Aug. 23, to 6.44 percent, the Mortgage Bankers Association said on Wednesday. That was the lowest since April 2023. The decline in mortgage rates, by 38 basis points in four weeks, has kept refinancing applications elevated, as homeowners who bought when rates were even higher moved to lock in lower monthly payments. The MBA 30year average rate topped out at 7.9 percent last October. Mortgage applications and purchase applications edged up just 0.5 percent and 1 percent respectively, as would-be homebuyers hold out for a further drop in rates. Interest-rate futures reflect bets the Fed will cut short-term rates by a full percentage point by the end of this year. Rising borrowing costs and a limited number of new and existing homes offered for sale have helped make home ownership increasingly out of reach for many. Democratic presidential nominee Kamala Harris and her Republican rival Donald Trump have made housing affordability integral to their pitch to voters in the November presidential election, with both promising to reduce costs for Americans in different ways.
A home on the market in Shore Acres, a neighborhood on Tampa Bay in St. Petersburg, Fla., on Monday, June 3, 2024. home can translate to bigger savings in maintenance and upkeep. “A smaller home means smaller utility prices and not having to buy as many goods to fill it up,” says Johndrow. Property taxes and home insurance premiums are often lower when you choose a smaller and less expensive home, too. And small homes usually have easier-to-manage yards as well — something to keep in mind for lawn-care and landscaping costs. More minimal lifestyle Having a larger home can also mean more work. Not only do you have to keep up with maintaining the house itself, but you also have to take care of everything in it. For Erin Hybart, a real estate agent in Louisiana who
specializes in tiny homes, living smaller translates to simplicity. “People are spending their lives working to pay for their house, and then even more of their time cleaning it,” Hybart says. In addition, when people have large homes with plenty of storage, they can easily forget about their belongings and get overwhelmed by their stuff. Another plus: Having to spend less time and money on your house, and the stuff in it, opens up other opportunities, such as pursuing education or traveling. More environmentally friendly Larger homes require more energy to keep running, particularly when it comes to heating and cooling. And outfitting a
ago, it’s important to keep in mind that home prices have increased significantly since then. Look into whether a new home in your desired area, even if it’s smaller, might cost more than what you can sell your current home for, says Johndrow. Greater focus on life “Are you willing to use cash to outside the home pay for the smaller home, from When you choose to live the proceeds of your larger smaller, you often shift your fohome, or are you going to get a cus away from spending time in mortgage?” says Johndrow. If your home. You may find youryou’re getting a mortgage, she self using your outdoor space says, keep in mind that interest more, such as relaxing on the rates are much higher now than porch or in a hammock instead they were just two years ago. of in your living room. And for Another thing to consider is those in more scenic areas, that whether your new home is part could mean enjoying the great of a homeowners association. outdoors with activities like hik- Many smaller homes are, espeing or fishing. cially in new developments, and People who live in cities might HOA fees are something to budmake more use of the city’s ame- get for. nities and entertainment opLimited options tions. For some, a smaller space can If you’re looking for a smaller be a positive, but for others, it’s property, you may have to look decidedly not. harder than most. The average size of a new home in 2023 was Less space 2,411 square feet, according to Obviously, living smaller puts the National Association of you in closer quarters with your Home Builders. While this is a family. This isn’t always a plus 13-year low, it’s still much larger — it can cause serious friction, than many looking to downsize especially if you work from might need. To find a smaller home and/or have a large family. single-family home, you may And if your area has limited enneed to be willing to buy an tertainment options or outdoor older home, and possibly be activities are limited due to flexible about its location. weather, small spaces can begin This is especially true for a to feel cramped very quickly. trendy tiny home, for which residential zoning is another factor Greater expenses to think about. Finding a place to In some circumstances, down- build a tiny home can be tricky sizing your home can actually depending on the zoning in your mean more expenses instead of area, Hybart says. They can also less. For instance, if you bought be difficult to fund with a tradiyour current home several years tional mortgage.