Homebuyers are often motivated to seek their next abode because it’s a certain time in life—they’ve gotten the first big job, or maybe they’re adding little ones under their roof. Before you know it, that time life comes down to an even bigger job or adding more loved ones under their room—that includes the four-legged variety, too. And then, there are the other milestones: the empty nest and retirement. While we know interest rates and unique market opportunities invite buyers and sellers to jump into a real estate transaction, these big life events serve as huge motivators for the majority of homebuyers and sellers.
Recently, it’s that retirement and empty-nest phase that’s been striking a different cord. Instead of downsizing, retirement-age sellers and buyers are upsizing. The Wall Street Journal profiled several older homeowners and found that instead of scaling down the square footage in retirement, they want something bigger. Some so that children and grandchildren are more likely to visit, as Realogics Sotheby’s International Realty’s Dean Jones told WSJ. It’s the “grandchild trap”—the larger estate is a factor that entices grown children and grandchildren to visit.
Realogics Sotheby’s International Realty global real estate advisor Mei Yang recently worked with one such client interested in something bigger—though with different motivations. Her client, a man in his 60s now retired, moved from West Seattle to Bellevue so he could be closer to his golf course and golf buddies in Bellevue. Mei helped him find his 1,600-square-foot townhome, a “smart-size” choice (smaller) compared to his West Seattle home.
Not two years later, the client was ready to get out of the townhome, and as a former financial professional, he saw growing inflation and was ready to make a change. Yang explained his line of thinking, “If he had kept his cash at a bank, his money is losing value. However, Bellevue area real estate has a track record of appreciation. Even after the costs of property taxes, insurance, and maintenance, a nice big home in Bellevue will give him a much higher and more stable return than cash in a bank or stock market (since it’s so volatile.)”
So she moved forward in helping him find the right situation for him. That ended up being a 5,000-square-foot home that he purchased for $1,950,000. Yang then helped him list his townhome for $785,000. They received multiple offers and closed at a final sales price of $860,000. In addition to the extra square footage in the appreciating Bellevue market near his preferred golf course, his large home was ideal for entertaining his friends, hosting international and guests, plus, he was no longer beholden to his townhome’s HOA.
This homebuyer’s retirement-era smart-size up is certainly a trend, as evidenced by the Wall Street Journal and their stories plucked from across the country. But it’s just one example of how this “silver tsunami”, or retirement-aged empty-nesters, can use their real estate investments to both gain equity in their portfolio and live their desired life.
For some, the idea of “smartsizing” includes the purchase of a home locally, and a second home elsewhere, like Arizona, Nevada, Hawaii, or Florida. The price per square foot in many other states is much lower compared to Washington, so it may make sense to move to a condo locally, and invest in a larger home in a warmer clime (or a cooler, for those seeking mid-winter mountain chalets.)
For those retirees who may find themselves sitting on an abundance of equity, say in West Bellevue or another similar market, and who are not ready to downsize—they could find opportunity locally in an area like Gig Harbor. A home of comparable size and quality will likely be less than the price of a Bellevue home but still affords many of the Northwest amenities locals are looking look for. With the sale of a Bellevue home and the purchase of a Gig Harbor home, there could even be enough equity to support the purchase of a home in a secondary market like Arizona.
Yang added that recently she’s worked with other clients who have also chosen Washington state homes, Kirkland and Woodinville in particular as their second-home destination. These clients came from California and sought the financial benefits of a Washington home, with no state income tax. One of those clients imagined making their way north from Silicon Valley following their impending retirement, making their way from the Golden State to the Evergreen State. Both clients purchased their homes sight-unseen.
For those who find themselves among the silver tsunami, it’s never too early to start imagining what the next chapter will look like. And if you’d take the advice of Yang’s client who went from a townhome to a 5,000-square-foot retreat, a safe investment is your real estate portfolio. It’s an investment in how and where you live. And whether you imagine that destination is down the corner or around the globe, Realogics Sotheby’s International Realty’s global real estate advisors have the connections to help you make your home wherever you want to be.