It’s easy to live in a small house when it’s just you and your partner and you’re both at work during the day. But when it’s time to retire and you’re both spending more time at home, things can start feeling a little … cramped.
That was precisely the case last year, when a couple in their late 60s approachedScott Cotrell, a broker with Living Room Realty in Portland, OR. They’d been in the same two-bedroom home for 23 years—and they were not about to stick around for a 24th.
“They looked at each other and said, ‘We’ve got to get a bigger house,’” Cotrell remembers.
Conventional wisdom says Americans tend to move to smaller homes after the kids grow up and clear out. But that no longer seems to be the rule. A significant number of older homeowners—30%, according to a recent study by Merrill Lynch—are opting to buy bigger homes. It has to do with a rebounding economy, wanting more room to entertain guests and family, and having more space to spread out.
“They’re not worried if they’ve saved enough,” says Christina Boyd, a financial adviser with Merrill Lynch in Wayzata, MN.
She says a typical retired baby boomer is between 60 and 75 years old, financially secure, and in good health. But they’re still cost-conscious: 26% of those anticipating a move want to reduce their home expenses. These savvy “upsizers” know they can do that by relocating to a place with a smaller price per square foot. So they’re not necessarily spending more; they’re looking for bigger houses for less.
Cary Carbonaro, a certified financial planner and author of “The Money Queen’s Guide,” a financial literacy book for women, says older people deciding to upsize is all about “getting more bang for their buck.”
Although upsizing has become more common, it isn’t yet the norm. According to the Merrill Lynch study, which polled over 3,600 retirees nationwide, 37% of retirees have already moved and 27% plan on moving. Of those who moved, 70% said they downsized or moved into a same-size home.
But thanks to a rebounding economy, more boomers might be willing—or at least able—to make the upgrade. With real estate and the stock market looking up, people have more choices than they did years ago. Twenty years ago, when Cotrell first got into the mortgage business, he was used to seeing retirees downsizing. Now he’s seeing an upswing in older people looking for bigger houses.
“After the recession and the crash, it wouldn’t have worked in their favor so much [to upgrade],” Cotrell says. “But they stuck to the market and the market came back so strong, so now they have the cash to do it.”
Following in their parents’ footsteps
You don’t even have to retire to want a bigger house. On the contrary—some older Gen Xers are starting to upsize early. Their kids have just flown the coop, and they want room for entertaining, not growing families. A better floor plan means more room to have friends and family over.
They “are making better money,” Boyd says. “They’re wanting more space as their kids get older. They want a bigger place where their friends can come over.”
Bigger doesn’t even have to mean bigger, technically.
“While a larger home might not necessarily be on the agenda, many look for homes that may be ‘better’ than their existing home in some way—their dream homes,” says Ann Thompson, regional sales executive at Bank of America in San Francisco. “Some are even expanding their homes to accommodate visits from extended family such as grandchildren.”
An increase in home values over the past two years has helped upsizers in their search for more space, she notes. Today, homeowners can more easily sell their current homes for a profit and make the transition to a larger home without pinching pennies.
More room—even for two
In early 2013, Bob Kurtz, of the Kurtz Group at Merrill Lynch in Alpharetta, GA,helped a couple trade in their spacious farmhouse for a custom-built larger home near their favorite country club. Not only will they get extra space to entertain more guests in the new house (which is under construction), but they’ll also have prime access to a golf course and clubhouse.
Carbonaro says she had one client, a single grandmother, who upsized to a four-bedroom home so her grandkids could stay with her, and another client who moved toLas Vegas to be closer to family.
“They want to live the good life,” Carbonaro says.
Cotrell helped his Portland clients, who have no children, move from their 1,500-square-foot, two-bathroom home to a 2,600-square-foot, four-bedroom, three-bathroom home. The husband wanted a man cave, the wife wanted a sewing room, and they both wanted a guest room.
“This is a big step up for them,” Cotrell says.
He’s helping another couple in a similar situation—in their late 60s, married, no kids, and wanting a larger home. Perhaps couples don’t need an empty nest to spur them to move. Instead, it might just mean the older we get, the more space we’d rather have.
Whatever the reason, it’s quite clear that when it’s time to retire, it’s time to relax—and that begins at home.