At a certain age, we’re faced with the decision to downsize. The kids move out for college or to start a life on their own. We come to grips that we’re empty-nesters.
The next stage: fantasizing about the extra space. This opens up extra bedrooms for a tricked-up theater room. Or you’re thinking about a larger home office or sewing room. Maybe a closet room with an island to fold clothes.
Then a reality check: You run across a property tax notice that’s a reminder you’re paying for that bonus space. It would be nice to cash in some home equity.
So, you wonder whether a move is worth the expense?
According to a study by STORAGECafé, it depends on where you live. STORAGECafé, an online platform that provides storage unit listings across the nation, looked at the country’s 20 largest metropolitan areas to see where downsizing pays off the most.
In the Dallas-Fort Worth-Arlington metro area, downsizing from a four-bedroom to a two-bedroom results in overall savings of roughly $190,000 for homeowners.
The value for a four-bedroom stands at $400,000 while a two-bedroom goes for around $201K. STORAGECafé also took into account the difference in property taxes over 10 years in addition to closing costs for both properties.
This formula ranks the Dallas-Fort Worth-Arlington market 12th nationally for potential downsizing savings.
When moving within the market, the most profitable route is Dallas-to-Arlington with $354K in savings. Dallas-to-Fort Worth is good for $348K in savings.
Not surprisingly, the top three downsizing savings in the STORAGECafé list were, in order, from California: San Francisco-Oakland-Berkeley, San Diego-Chula Vista-Carlsbad, and Los Angeles-Long Beach-Anaheim.
Jon Hammond, professor of real state and finance at Austin Community College, told STORAGECafé that home equity is an important factor in downsizing decisions.
“Home equity has created a buffer that can allow homeowners to pay off debt, send the kids to college, downsize their housing, and eliminate the need for a mortgage,” Hammond said.
