Opportunity often rises in times of change, and that’s true for homeowners wishing to upsize as the market adapts to higher mortgage rates and cost of living expenses.
Upsizing in a market that’s coming off the boil can feel scary but it can be positive. While you might sell for slightly less than a few months ago, you’ll most likely make a greater saving when you upgrade to a more expensive property.
I’ve worked with many clients who have upsized successfully, and I always step them through a few questions to understand why they want a bigger home. I’ve listed six below, and I hope you find them helpful.
Core issue
It’s important to understand why you need to invest more of your earnings in real estate. Many upsizers have growing families, so separate bedrooms for teenagers is at the top of their list. Others need more room for in-laws, their hobbies or to work from home. Why are you doing this? What’s your core reason?
Room to move
To ensure you don’t waste a lot of gasoline going from one open house to the next, be clear on how many rooms you want. Crystalize your thinking around the number of bedrooms, whether you and your partner need separate studies, a teenager’s retreat, or an awesome garage for a classic car.
Finding finance
With the Federal Reserve increasing rates, mortgages are on the move. Talk to your lender about the money you might need to borrow and the interest rate they’ll charge. When they issue an approval, it will have a sunset clause to protect the lender from further rate rises. So, you may need to move quickly.
Affordability and Value
Establish what you can afford, of course. Equally, you must ask yourself whether the additional expense will cramp your lifestyle. In other words, is the cost of the purchase going to be worth the sacrifice? Weigh that up against the improvements that a larger home with more amenities will offer, and ensure the equation works out in your favor.
Fixer-Upper
Many upsizers seek out homes needing TLC so they can purchase at a discount and invest in upgrades as their cash flow allows. That’s a cool strategy, but be aware the construction industry has a labor shortage currently, and the costs of materials are rising. This is a bigger challenge than it was a few years ago.
Long-term view
Ask yourself how long you intend to live in your bigger home. If you want to upgrade because the kids need their space, it’s worth it if they’re 10 or 11; not so much if they’re 16 or 17. Eventually, kids head to college or out into the world, and a large family home becomes a challenge to maintain in your later years.