Move-Up vs. Second Home: Which One Is Right For You?

If you're feeling cramped in your current space, you've probably considered a move. But what type of home would suit you best? A move-up home or a second home? For many South residents, the answer may be different today than it was just months ago. Why? Because the pandemic has changed the way many of us live, work, and attend school—and for many, those changes have shifted the priorities when it comes to choosing a home.

According to a recent survey by The Harris Poll, 75% of respondents who have begun working remotely during the pandemic would like to continue doing so—and interestingly,  66% would consider moving if they no longer had to commute as often. Some of the top reasons people considering a move were to gain a dedicated office space (31%), enjoy a larger home (30%) and have more rooms overall (29%).1      

It's no wonder space has become. a major concern. Online school has become a reality for families everywhere - including here in the South Bay - creating a need for more space and more privacy. (In my own home, my husband and I are both working from home full time, and our youngest son, a senior at Chadwick School in Palos Verdes is 'enjoying' distance learning full time. It's been a challenge!) Plus, a  growing number of buyers now have the luxury of choosing homes further from downtown Los Angeles, Santa Monica, and other local commercial hubs as they seek out more room and less congestion.  There may never be a better time to move to the beach and enjoy all our community has to offer. And for those who don't want to give up their home closer to the city, choosing to buy a second home in the South Bay is another option. 

What's the right option for you? Here are some thoughts to consider:

WHY CHOOSE A MOVE UP HOME?

A move-up home is typically a larger or nicer home. It’s a great choice for families or individuals who simply need more space, a better location, or want features their current home doesn’t offer—like access to the beach, an in-ground pool, a different floor plan, or a dedicated home office.

Most move-up buyers choose to sell their current home and use the proceeds as a downpayment on their next one. If you’re struggling with a lack of functional or outdoor space in your current home, a move-up home can greatly improve your everyday life. And with mortgage rates at their lowest level in history, you may be surprised how much home you can afford to buy without increasing your monthly payment.3,4If you’re feeling cramped in your current space, you’ve probably considered a move. But what type of home would suit you best: a move-up home or a second home? Let’s explore each option to help you determine which one is right for you.

WHY CHOOSE A MOVE-UP HOME?

A move-up home is typically a larger or nicer home. It’s a great choice for families or individuals who simply need more space, a better location, or want features their current home doesn’t offer—like an inground pool, a different floor plan, or a dedicated home office.

Most move-up buyers choose to sell their current home and use the proceeds as a downpayment on their next one. If you’re struggling with a lack of functional or outdoor space in your current home, a move-up home can greatly improve your everyday life. And with mortgage rates at their lowest level in history, you may be surprised how much home you can afford to buy without increasing your monthly payment.3,4 One major benefit of choosing a move-up home is that you can typically afford a nicer place if you spend your entire budget on one property.

THINKING OF MOVING-UP OR BUYING A SECOND HOME?

Download a free copy of my recent report Lowest Mortgage Rates in History: What it Means for Homeowners and Buyers to see how low mortgage rates could help you reach your goals. Whether your thinking of buying your first home, a step-up home, or even a vacation home.

Let's explore your options together

Click here to schedule a call at a time that works for you!


WHY CHOOSE A SECOND HOME?

Once reserved for the ultra-wealthy, second homes have become more mainstream. Home sales are surging in the South Bay - an ideal place to escape the crowds of the city (not to mention the heat) and quarantine in comfort.  And with air travel on hold for most of us, channeling your vacation budgets into a permanent vacation home may be ideal.

A second home can also be a good option if you’re preparing for retirement. By purchasing your retirement home now, you can lock in a low interest rate, start paying down the mortgage, and begin enjoying the perks of retirement living while you’re still fit and active. Plus, it’s easier to qualify for a mortgage while you’re employed, although you may be charged a slightly higher interest rate than on a primary home loan.6

Another advantage of choosing a second home is that you can offset a portion of the costs—and in some cases turn a profit—by renting it out on a platform like Airbnb or Vrbo. Not all South Bay communities allow short-term rentals (especially in single-family residential zones), but we can work together to determine if a certain property can be rented, and if so, the true income potential. 

WHICH ONE IS RIGHT FOR ME?

You may read this and think: I’d really like both a move-up home AND a second home! But if you’re dealing with a limited budget (aren’t we all?), you’ll probably need to make a choice. These three tactics can help you decide which option is right for you.

  1. Determine Your Time and Financial Budget

You may meet the bank’s qualifications to purchase a home, but do you have the time, energy, and financial resources to maintain it? This is an important question to ask yourself, no matter what type of home you choose.

Most buyers realize that a second home will mean double mortgages, utilities, taxes, and insurance. But consider all the extra time and expense that goes into maintaining two properties. Two lawns to mow. Two houses to clean. Two sets of systems and appliances that can malfunction. Second homes aren’t always a vacation. Make sure you’re prepared for the labor and carrying costs that go into maintaining another residence.

Of course, some move-up homes require more work than a second home. For example, if your move-up option is a major fixer-upper, you’ll probably invest more energy and capital than you would on a small vacation condo by the beach. Have an honest discussion about how much time and money you want to spend on your new property. Would a move-up home or a second home be a better fit given your parameters?

1. Rank Your Priorities

If you’re still undecided, make a wish list of the characteristics you’d like in your new home. Then rank each item from most to least important. This exercise can help you determine your “must-have” features—and which ones you may need to sacrifice or delay. Here’s a sample to help you get started:

#

FEATURE

 

Dedicated home office

 

Extra bedroom

 

Pool

 

Walk to the beach

 

Big backyard

 

Close to friends and family

 

Short commute to the office

 

Investment potential

2. Explore Your Options

Once you’ve determined your parameters and priorities, it’s time to begin your home search.

If you’re still not sure whether a move-up home or a second home is right for you, I can help.

Contact me to schedule a free consultation. We’ll discuss your options and help you assess the pros and cons of each, given your unique circumstances.

We can also send you property listings for both move-up homes and second homes within your budget so you can better envision each scenario. Sometimes, viewing listings of homes that meet your criteria can make the decision clear.

LET’S GET MOVING

Whether you’re ready to make a move or need help weighing your options, I’d love to help. I can determine your current home’s value and show you local properties that fit within your budget. Or, if your heart is set on a second home in another market, I can refer you to an agent in your dream locale. Contact me here to schedule a free, no-obligation consultation!

Sources:

  1. Zillow -
    https://www.zillow.com/research/coronavirus-remote-work-suburbs-27046/
  2. The Harris Poll -
    https://theharrispoll.com/should-you-flee-your-city-almost-40-have-considered-it-during-the-pandemic/
  3. MarketWatch -
    https://www.marketwatch.com/story/mortgage-rates-keeping-falling-so-will-they-finally-drop-to-0-2020-08-13
  4. Toronto Star -
    https://www.thestar.com/business/2020/08/07/you-can-get-a-fixed-rate-as-low-as-184-per-cent-which-is-unbelievable-low-mortgage-rates-driving-up-home-prices.html
  5. Kiplinger -
    https://www.kiplinger.com/real-estate/buying-a-home/601091/timely-reasons-to-buy-a-vacation-home
  6. The Press-Enterprise -
    https://www.pe.com/2018/11/17/5-tips-on-when-should-you-buy-a-retirement-house-hint-before-you-quit-work/

Comments

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