The price of (not) staying put

Plus, rising rents and the golden handcuffs

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  June 25, 2022 | Issue #48

Good morning! This week we're talking about downsizing, housing inventory and renters. Today's edition of Money Moves was written by Aly J. Yale. The dwindling perks of downsizing Kiersten Essenpreis for Money With home prices up an eye-watering 19% in just the last year, you'd think downsizing would be a no-brainer. You could sell at record highs, buy a much smaller home and pocket the rest — using it to pad your retirement income or travel the world. The math isn't that simple, though. Selling high right now also means buying high — and no matter how small that new property is, you're going to pay a premium for it. As mortgage advisor Rebecca Awram recently told me, "Whatever smaller home you choose to buy will likely be much more expensive than it would have been otherwise. You're getting less value for your dollar than in another market situation." When you throw in inflation and the costs of moving, you may wonder: Is there any financial benefit to downsizing anymore? The experts I talked to say there are ways to do it profitably, but it's not always easy. And if the numbers don't work in your favor, there may be other ways to cash in on your rising home equity instead. For more: For Retirees, Downsizing to a Smaller Home Isn't the Cash Grab It Once Was Must-read before you downsize: Here's Just How Expensive Homeownership Has Become The price of sunshine Sunny skies and pristine beaches might sound nice, but how much are you willing to pay for them? If you hope to rent a home, it better be quite a bit. According to numbers released this week, some of the nation's sunniest spots are seeing the biggest jumps in single-family rents. In Miami, for example, rents have increased a whopping 41% since last April. That's nearly three times the national growth rate (which is already at a 40-year high). The other top cities for rent growth are warm-weather spots too — Orlando, Phoenix, San Diego and Las Vegas. See the jaw-dropping numbers for yourself: For more on costly housing: 15 Cities Where Home Prices Are Way Higher Than They Should Be Golden handcuffs The housing market is finally showing signs of slowing down. As mortgage rates hit highs not seen in over a decade, buyers are pulling back, bidding wars are waning and things are starting to seem … less breakneck. While experts say it could lead to slightly slower price appreciation, it still doesn't solve one of the market's biggest and most pressing problems: There just aren't enough homes to buy. Sure, increasing new home construction could help (a bit), but recent numbers show the market would need nearly a million more properties to even get close to historical averages. And for that to occur? More existing homeowners would need to start selling. That's not happening, though. The average homeowner now stays put a lengthy 10.6 years before they move. That's twice as long as in the pre-housing crisis years. Add to that the much higher mortgage rates homeowners would see in buying a new property, given that many refinanced at the sub-3% rates we saw in 2021, and things aren't looking too hopeful. As housing economist Mark Fleming recently put it, "There is a financial disincentive to sell their homes and buy a new home at a higher mortgage rate. The golden handcuffs of low mortgage rates prevent more supply from reaching the market." Just call me Queen Aly Source: Infrogmation / Wikipedia There's a popular saying that "A man's home is his castle," but usually, the castle in question is metaphorical. In reality, the speaker's probably referring to a cute colonial with painted shutters or a rustic farmhouse with a wraparound porch. Not an actual fortress in Irish Bayou, Louisiana. If you're willing to move to the northeast New Orleans community, you could find yourself the proud owner of a real-life, two-bedroom, 1.5-bath castle. Really. The property — dubbed Fisherman's Castle — was built in 1981 as a tourist attraction for the World's Fair. It's now a well-known landmark for locals traveling the I-10 and can be all yours for just $500,000. (An empty lot and the fishing camp across the street are also included!) Check out the house for yourself in this YouTube video. (And if you're craving more castle content, read this New York Times tale of a Hollywood actor-turned-English-manor-renovator.) Love historic houses? Check out Kristen Bahler's latest: Cheap Old Houses' Are All Over Instagram. But Are They Good Investments? Happy hunting, P.S. If you haven't noticed, I'm new here. Our fearless leader Sam Sharf is out for a few months, and I'll be taking over. Feel free to connect with me on Twitter, where I'm @alyjwriter, or via email at alyjyale@gmail.com. P.P.S. Know of a local castle or other quirky landmark in your area? Send it my way. I might feature it in a future Money Moves. P.P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page. Money's Essential Home Buying Resources: Summer 2022 On the hunt? Check out Money's Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips Key question: How much house can I afford?

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