Smart Moves by Ellen James Martin

Trying to Downsize With Kids in Tow

A clinical social worker in her 60s had long dreamed of downsizing from her sprawling suburban Tudor to a petite, low-upkeep condo in a pristine gated community. She was convinced the summer of 2020 would be the ideal time to make this exciting transition happen.

But that was before COVID-19 and before her two daughters -- one a graduating college senior, and the other a young professional who lost her marketing job -- moved back home unexpectedly. Now her transition is on hold indefinitely.

“I hate waiting. But I’m also horrified at the thought of putting my girls out on the street,” the social worker says.

The other reason she’s postponing is that due to economic uncertainty, she worries her Tudor wouldn’t fetch as high a price as it would during a more robust economy.

For the social worker in this true story, the decision to delay her sale is more of an emotional than financial choice. But despite the recession, real estate specialists are surprisingly optimistic home prices will remain stable in many neighborhoods. The reason? A severe shortage of available properties.

“The supply of homes for sale declined even more dramatically than homebuyer demand in April,” says Taylor Marr, a lead economist at Redfin (redfin.com), the national real estate brokerage.

Indeed, Marr says many affordable housing markets are continuing to see “sizable price gains.” Moreover, owners who are postponing their sales are further worsening the housing shortage, especially in areas where a strong job base has kept up buyer demand.

Take the case of Virginia Beach, Virginia, which is located near several military bases. There employment remains stable and “houses are flying off the market,” says Renee Joseph, a real estate agent who’s worked in the area since 2007.

Joseph says that everywhere in the nation, in strong markets as well as weak ones, aspiring downsizers with “boomerang children” living at home face special challenges should they decide to sell during the pandemic. One issue is that many grown kids returning to the family nest bring with them lots of belongings, including bulky furnishings.

“All that clutter can make your house look small and sell for less money. Until your house sells, you have to put all that extra stuff in your garage or a storage unit,” she says.

When your property is shown to prospective buyers, it’s also critically important that every member of the family -- including the grown kids--leave the place until the buyers have departed. That’s a given in any market but it’s all the more vital during a time when everyone is acutely fearful of transmitting the virus.

“One great thing about the current market is the availability of virtual home tours, which are truly amazing but also expensive to do,” Joseph says.

Here are a few pointers for wannabe downsizers considering a sale despite grown offspring who’ve returned to the nest:

-- Weigh the idea of providing a temporary rent subsidy.

Given the level of difficulty confronting many young people trying to gain or regain lost ground in the current job market, it can be a jarring transition if they’re jettisoned from the family home without sufficient funds to cover their own housing costs.

Should you help them pay for the costs of renting their own place? Tom Early, an independent real estate broker, says that might be a realistic way to proceed with your home sale without fear your offspring could become homeless.

“Not everyone can afford to help their kids pay rent for their own place. But if you have ample funds, this could be the best solution for all concerned,” says Early, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

-- Consider buying an investment property where your kids could live short-term.

Clearly, many parents are money-strapped as they head toward retirement, which is the reason they must liquidate a large family home.

But retiring parents who have extra funds might consider purchasing a small investment property where their offspring can live for a limited period until they’re on their feet financially, says Donna Goings, a veteran real estate broker affiliated with the Residential Real Estate Council (crs.com).

She recommends that anyone considering this plan make sure their kids know the place is for their short-term use only and will likely be converted to a rental property in a few years.

Interested in the idea? Then search for a place that should be easily rentable in the future, perhaps because it’s located near a university where student housing is always in demand.

-- Don’t feel guilty about downsizing to protect your retirement assets.

By the time parents reach their late 50s or early 60s, Goings says they need to focus much more intensely on their own finances rather than subsidizing their grown children.

“At a certain stage, people have to get on with their own lives,” she says.

If you have a grown child or two living with you yet you need to move soon for financial reasons, it might be feasible for the offspring to also move to the new place, assuming you’ll have sufficient space there. But in that case, Goings says it’s wise to charge them at least a minimal level of rent -- proportional to what they can currently afford.

“The best thing you can do for your kids is to see that they get on their own two feet so they’ll develop the skills for independence,” she says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)