Don’t see how that plan makes them want the place they live in now and their expenses now go up. fact is the place they downsize to will have gone up. its a zero sum game overall.
If housing prices, I don’t know, triple, and then they move into a place that’s half as expensive, they still have three times more cash in hand than they would with no price increase. If general inflation is lower than that, it’s to their benefit. (There’s also those reverse mortgage ads all over old people TV, if they want to stay put)
Whether this is the great investing strategy it’s been sold as is another question. General inflation does exist, housing prices don’t always go up even over the long term, and even the greatest markets still tend to have a lower return than equities and probably even some bonds. The big positive a financial advisor will mention is that paying off a house forces you to actually sock money away instead of spending it all.
It just does not work that way. All houses do not triple. The change in price at different levels change at different paces and lately its the cheaper stuff that has risen a lot. If you have those segments on ultra rich properties in your area you will often see how they sold at some huge price and sold for way less or vice vera. They are aweful swingy. The lower the cost the more definitive the cost is as. Real cost reduction comes from getting something dilapidated but most people in downsizing are going from something older in need of repair to smaller but well renovated. People really have been sold on this idea of rising line good no matter what when what really matters is their current monthly nut and their ability to have cash over and above that for quality of life and savings.
Or they plan to eventually sell when they retire and downsize.
Don’t see how that plan makes them want the place they live in now and their expenses now go up. fact is the place they downsize to will have gone up. its a zero sum game overall.
If housing prices, I don’t know, triple, and then they move into a place that’s half as expensive, they still have three times more cash in hand than they would with no price increase. If general inflation is lower than that, it’s to their benefit. (There’s also those reverse mortgage ads all over old people TV, if they want to stay put)
Whether this is the great investing strategy it’s been sold as is another question. General inflation does exist, housing prices don’t always go up even over the long term, and even the greatest markets still tend to have a lower return than equities and probably even some bonds. The big positive a financial advisor will mention is that paying off a house forces you to actually sock money away instead of spending it all.
It just does not work that way. All houses do not triple. The change in price at different levels change at different paces and lately its the cheaper stuff that has risen a lot. If you have those segments on ultra rich properties in your area you will often see how they sold at some huge price and sold for way less or vice vera. They are aweful swingy. The lower the cost the more definitive the cost is as. Real cost reduction comes from getting something dilapidated but most people in downsizing are going from something older in need of repair to smaller but well renovated. People really have been sold on this idea of rising line good no matter what when what really matters is their current monthly nut and their ability to have cash over and above that for quality of life and savings.