Smart Moves

Back in March, a college professor and his homemaker wife received an urgent appeal from their 37-year-old son in New York City. The son wondered if he, his wife and their two toddlers could move into his parents’ small ranch house in suburban Delaware. They were desperate to escape their urban neighborhood, one of the COVID-19 epicenters.

Soon, the son and his family took up residence in modest, semi-finished quarters in his parents’ basement. Fast-forward more than two months and they still have no intention of returning to New York. Indeed, the grandparents are so delighted with the arrangement that they’re now pondering the purchase of a larger place where all three generations could live more comfortably into the indefinite future.

Frank Furstenberg, a sociologist who researches family issues, doesn’t know the people in this true story. But he’s not surprised that the pandemic caused all of them to pile in together.

“Family homes have always served as a refuge in times of crisis. Doubling up is the new normal, not the new abnormal,” says Furstenberg, a professor emeritus at the University of Pennsylvania.

In fact, COIVD-19 caused Furstenberg himself to retreat from his Philadelphia apartment to a five-bedroom country house he owns in Connecticut that he’s now sharing with three grown grandchildren, all of whom are also exiles from urban living.

Real estate specialists say it’s too soon to know the extent to which such COVID-related family arrangements will endure after the pandemic clears. But they observe that like the Delaware professor and his wife, an increasing number of homeowners are now considering a move to a larger property to accommodate multi-generational living -- including housing for family elders.

“It’s not just the pandemic but also financial factors, like student debt, that are causing more family members to move in together,” says Jon Boyd, a Michigan real estate broker who specializes in assisting buyers.

Joel Kan, an economic analyst for the Mortgage Bankers Association (mba.org), says, “Twehe housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search.”

Of course, economic setbacks are currently making it tough for many would-be buyers to fulfill their hopes of upsizing. Yet an increasing number of those who still have solid jobs are now eagerly taking advantage of near-record-low mortgage rates.

Jon Boyd, a Michigan real estate broker who specializes in assisting buyers, says he’s busy these days helping clients define and fulfill their changing expectations. Before arranging any property tours with new clients, he always conducts a 90-minute Zoom meeting to discuss their priorities.

“What’s absolutely risen to the top of the list is a floor plan that lets every adult in the house have a home office for their exclusive use,” says Boyd, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

After thinking it through, he says many buyers realize that bedrooms, which afford privacy for conducting work, are often the best choice for home office space.

“You don’t need a large bedroom, but you do need walls and a door that encloses the space to make it workable,” Boyd says.

Here are a few other pointers for bedroom-minded buyers:

-- Realize that a four-bedroom home could be an affordable purchase.

In many areas, a home with four bedrooms is no more expensive than one with three.

“If you can afford a three-bedroom house, usually you can also afford a four-bedroom house in the same neighborhood,” Boyd says.

Why does that fourth bedroom typically add little to the cost of a property?

The reason, Boyd explains, is that home values are determined primarily by location, as well as square footage. And the square footage of many four-bedroom homes is no greater than three-bedroom properties in the same neighborhood. Because of that, he says a fourth bedroom also doesn’t usually add much, if anything, to the home’s utility costs.

-- Make sure any space counted as a “bedroom” meets the definition.

Given the increasing popularity of properties with plenty of bedrooms, Boyd says it’s not unusual for home sellers to sometimes stretch the definition when counting their bedrooms.

For instance, some sellers will place an armoire and a bed in a small den or another spare room and then will call it a “bedroom.” Or they’ll count a sitting room off a master suite as a “bedroom.” But Boyd says buyers shouldn’t be fooled by these falsely named “bedrooms.”

“If a space doesn’t have a built-in closet of its own, as well as a window or door for egress, it’s not really a bedroom. Likewise, if a room can only be entered through another bedroom, it not a bedroom,” he says.

-- Consider a property with a first-floor master suite for an elder parent.

Boyd estimates that at least 20% of all buyers “are now talking about an elder parent moving in with them at some point in the future.”

If this is a possibility in your case, he says you should consider buying a one-level, ranch-style home or a place with a first-floor suite, complete with a private bath.

Even if your parents can easily scale the stairs now, they might find it a lot harder later. Having ready access to a bedroom with a full bath can be especially important to those who are elderly or have a disability.

"The coronavirus is making everyone more aware of the needs of our aging population. A first-floor master suite is also a terrific plus for resale. All this makes it a win-win for buyers,” Boyd says.

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

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.)

Real estate experts say when it comes to this year’s housing market, some potential sellers are in a much stronger position than others, depending in large measure on where their property is located.

“I think it’s a tale of two economies now,” says Glenn Kelman, the chief executive officer of Redfin, the Seattle-based real estate company that tracks markets all over the country.

Given the COVID-19 pandemic, Kelman says the locational preferences of homebuyers are now shifting dramatically -- a trend he expects to endure for months and perhaps years ahead. Broader acceptance of “virtualization,” which involves telecommuting from home offices, favors For Sale properties in popular suburban or small city settings.

“I’m really worried about the big cities,” says Kelman, who says online search traffic shows that relatively few buyers now aspire to live in densely populated urban areas where coronavirus cases have been numerous. Transaction data from major cities like New York and San Francisco are proving notable examples. Also hurting big city markets is their high housing prices.

The good news for wannabe sellers in favored suburban communities is that pent-up demand there is still outstripping the supply of available homes, which should prove a strong assist for owners who wish to sell later in 2020 or early next year.

Jan Brito, a Washington, D.C.-area real estate broker, says suburban sellers with homes that have large yards and are located close to solid schools are currently faring well.

Are you a homeowner considering a sale before the pandemic clears? If so, these few pointers could prove helpful:

-- Check out the supply-demand ratio for your neighborhood.

Before setting your price and timing your sale, you need to know if values are rising, falling or holding steady in your community, says Eric Tyson, a personal finance specialist and co-author of “House Selling for Dummies.”

“You need to determine if you’re living in one of those micro markets that’s holding up nicely,” Tyson says. He says news reports on real estate often understate wide neighborhood-to-neighborhood variations.

“I’ve always objected to that one-size-fits-all view of real estate. It’s very important to know what’s going on in your particular community. But don’t rely solely on anecdotal reports. Numbers can speak louder than words,” he says.

To assess the overall trend for your neighborhood, you need to look at closed sales going back at least five years.

“Track median prices for all the homes sold in your area. But don’t bother tracking average sale prices, because they can be very affected by the mix of homes sold at any given time,” Tyson says.

By noting changes in values over multiple years, you can evaluate the relative strength of your market and how aggressive you can be on pricing.

“When you’re making big decisions on when to sell and how much to ask, there’s no substitute for good trend data,” Tyson says.

-- Ask local real estate agents about recent closed sales in your area.

You may believe your neighborhood is an exceptional micro market that’s stayed strong despite economic turmoil in the country. But before putting a price on your property, Tyson recommends you solicit the views of three experienced real estate agents who’ve long worked your area.

Prior to settling on a listing agent among the three candidates, he says you should ask all three to justify their opinions on your home’s current value.

“Ask them to go over recent comparable sales in your community, telling you why your place is worth more or less than the ones that have sold,” he says.

If two of the three agents say your community is going through a lackluster period for sales, yet the third is enthusiastic about an upturn, Tyson says you should be skeptical about the optimist’s views.

“Most people are inclined to hire the agent who has the most positive position on valuations in their market. But that’s not always a good idea,” he says.

-- Price your place fairly rather than boldly.

Real estate specialists say that within every metropolitan area there are now micro markets where values are staying strong. But they caution against overconfidence at a time when many buyers are anticipating an erosion in property values.

Tyson says wishful thinking about their neighborhood can cause owners to overprice. That, in turn, can mean a home sits unsold for a lengthy period, resulting in a “stale property” that will ultimately go at a deeper discount than would otherwise have been necessary had it been priced realistically from the outset.

“Affordability remains a huge issue especially for young buyers still in the household formation stage. Even if you live in an attractive enclave, don’t fall into the trap of appearing greedy, which is a big mistake,” he says.

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