The Finance Blogger


Downsize to a Condo

What will we do with all our stuff? Downsize to a Condo? We cannot possibly fit all of the things we have into a two bedroom condo! We hear that a lot from our friends as well as havingDownsize to a Condo wondered about this ourselves. The answer is that you cannot fit everything into a condo, unless it is really really big and then you are probably coming from a large home so it still will not work. This is probably one of the toughest emotional things to deal with when you are considering moving and down sizing to something smaller.

Friends of ours have done this. They had garage sales for weeks, they gave away all kinds of things and they just had to throw some things out that they might not have if they had stayed in their home. We have seen two couples do this and both are now happy with their decision, but it took them over two years to get rid of everything and even then it was a challenge. There is just so much emotional baggage attached to many things that we have. Everyone has to get over this part of the decision, however the more important aspect of the decision we think is all about the money and the life style change that you are making.

Downsize to a Condo – some Issues

Life Style Change

You may be moving from a single detached home with space between you and your neighbors to a condo with 4 walls and neighbors who might be noisy above or beside you. There may be one parking spot and in a lot of cases no place to store anything.  You are also cooped up inside unless you have a balcony. Even then it is only so large. This is a big change and one that should not be taken lightly. Think about it for awhile, even spend some time living in a vacation condo to see what it is really like to live in one. Take the time to imagine living this way for the rest of your life.

Financial Issues

This is really the point of this post and this blog. We want to review the issues around moving from your home to a condo from a financial perspective. In most cases utilities are going to cost less since you have a smaller space and you have people living on one or both sides of you.

Taxes can be even more expensive depending on the relative value of the condo vs. your home and the way your city or state evaluates tax rates. The big expense is going to be condo fee’s. This comes as a shock to many people. We have seen condo fees approaching $1000 per month for a 2 bedroom condo in our city for a unit that costs in the neighborhood of $500,000! Many residents are older, do not do anything for themselves and want everything absolutely perfect and they are willing to pay for it.

Low Condo Fees

Beware of moving into a new condo with low fees. They are set that way by the builder to entice buyers. Once the board is elected they must complete a financial study which they are required to do by law. Suddenly they need to raise the condo fees by a large amount to cover anticipated expenses in the future. This can really hurt some people if they are only just making it in terms of meeting the monthly bills.

Many communities charge a land transfer tax that can be quite substantial. This may cause a lot of people some consternation when they realize just how much it is. Before you make a decision to downsize make sure you have included and understood all of the fees associated with selling and buying a home.

For the record we looked at this solution to downsize. We have not been able to find anything that we like with reasonable numbers. We are planning to stay right were we are. Our family will pay the fees we need to maintain our own home!

If you have looked at this scenario for downsizing and concluded that it is something you want to do, we would like to get your comments. What we have discussed is not an issue of whether you can afford it or not. It is more of an issue of whether it makes sense from a lifestyle and financial perspective or not.

Many Baby boomers are going through this exact decision process and it is difficult.

 

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One Response to “Downsize to a Condo”

  1. we looked at moving to a condo and it makes no sense for us to move into a condo. financially, life style and just plain work to move. it is not worth it at all to move, so we are going to stay right were we are

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