Many homeowners that own high dollar homes are looking to sell their home and move into a smaller home. They are sometimes doing this in hopes of having little or no mortgage, smaller utility bills, and cheaper property taxes and just generally lower expense amounts associated with anything that has to do with residential maintenance on the home.
Most of these homeowners are discovering quickly that downsizing their home isn’t as easy as they thought it would be.
Larger high priced real estate is spending a lot of time on the market lately. Not only are they not selling quickly, they are also taking larger hits on their value. As an example, many homes that were $1 million homes not that long ago are losing around 20% of their value quite often. These homeowners are trying to sell homes that were $1 million dollar homes and because of the declining home values are now only valued at $800,000.
Finding buyers for these homes isn’t as easy as it was during the days of the housing market bubble when jumbo mortgage loans were easier to obtain. In today’s market, jumbo mortgages are more difficult to get. 10% of Americans are unemployed and many that still have jobs are saving money because they are uncertain about what the future might hold. Because of this, the housing trend is now turned a complete 180 degrees. The median new home last year was only 2,219 square feet. That is a decrease of 2.5% from 2007’s median new home square footage.
This doesn’t’ mean that all homeowners that live in large, expensive homes are trying to downsize to smaller properties. Only 22% of homeowners that were selling their homes at the end of June were selling to move to a smaller home. That was measured during a 12 month period from June 2008 to June 2009 and most of these homeowners were older and no longer needed all the space.
Still, a good number of these sellers were homeowners that have lost employment or realized that their mortgage payments are more than they can currently afford.
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