Thursday, May 22, 2014

What's the right size home for you? The Rightsizing Equation

There is a significant trend toward smaller homes amongst both empty nesters and young families.    The generally used term is called downsizing--but I prefer “rightsizing.”   I’ve always been a big proponent of efficiency – sometimes to the chagrin of my wife (why cook in early December when you can make at least 7 different meals using leftover turkey?).    Our family recently moved from a 3500’ McMansion (which would be considered on the small side considering the trend of the last 20 years) to a smaller cape which we renovated  -- and  the space feels larger and better utilized. (For some great examples of this, read about architect Sarah Susanka’s concept of the “not so big house” on her website

There are a number of hard facts that make rightsizing a compelling argument.  Empty nesters moving to a smaller home can realize the economic benefits of lower mortgage, utility, tax and maintenance expenses while at the same time not feeling enslaved to the care of feeding of a large home.    Just as importantly it improves quality of life.   Not to mention the fact that equity from the sale of the larger home can be deployed to provide incremental investment income.

For younger families, there has been a general shift in sensibilities.   Bigger is not necessarily better.    A well-appointed, efficient home that is green and consumes fewer resources are the priorities.  Just as with the older set, the young families want a home that is a component of their lives but doesn’t rule their lives.  Along with this is the renewed interest in community, common spaces and neighborhoods where people of all ages have opportunities to interact.

In this post, I wanted to explore the hard numbers around the generally accepted notion that rightsizing for empty nesters saves money.   After some consideration I decided that there are really two independent scenarios to look at:  1) the cost reduction model and 2) the investment income model.

In the cost reduction model, I looked at a comparison between the estimated costs of ownership of the 2054 sq foot “Currier” model home at our Skyview project versus a larger, 5500 sq foot home in the same area.  We see this scenario playing out each day as buyers look to move from homes within Skyview’s town of Pelham, from the Boston area, or from other affluent communities in New Hampshire.    I assumed that all other variables were consistent between the two homes and did a rough estimate of utility cost based on square footage.  The net savings by rightsizing is $33,000 per year.  

In the second scenario, I assumed that equity in the larger home  could be invested to produce investment income.    In this example, I assumed $400,000 of equity in the home based on the current market value less the current mortgage balance.   For capital gains tax, I assumed a 25% long term capital gains tax rate X the difference between the sales price and original purchase price.  After subtracting  sales commission and down payment for the new Currier home, more than $290,000 is left for investment.   At a 7% annual return, that equates to over $20,000 in annual investment income.   

Every situation is different.   If you’d like a copy of this spreadsheet, just send  me a quick email or connect through our Skyview website.   Regardless of your particular circumstances, rightsizing your home can make a lot sense both economically and in your quality of life.

Thursday, May 8, 2014

Can you still save half a million dollars by moving to New Hampshire?

This is an update to a post I published last May.   In the last 9 months, home prices in Boston have continued to rise.   So, I re-ran my original analysis to see if you could still save half a million dollars buying in NH versus MA.  Read on...

The Boston area residential real estate market is hot -- driven in large part by the enormous resurgence in tech and life sciences companies.   This infographic illustrates the variable of commuting distance from

 downtown in determining home price. If you work in Boston or Cambridge, New Hampshire may seem a world away but it's only 34 miles to Kendall Square.  You would be surprised at how many executives who work in Boston, Cambridge, Burlington and Waltham live in southern New Hampshire.

I recently became involved in residential development in southern New Hampshire with our Skyview project. Real estate agents kept telling me about the perception that Massachusetts buyers had about high property taxes in New Hampshire.   That got me looking at property taxes and other factors that contribute to cost of living differences between NH and Mass.   I came up with the following calculator that takes into account housing costs, tax rates, salaries, commute cost and a number of other factors.   The results were pretty compelling - not only were absolute property tax dollars LOWER in NH but the 15 year savings were over half a million dollars.

Now, my assumptions may be a bit off and not all situations are the same.  I'd love to hear feedback.  (If you want a copy of the actual spreadsheet to play with - send me an email.).

Granted there are big differences between living in Cambridge, MA and Pelham, NH.   But the difference between living in Westford and Pelham are far less dramatic.  In fact, many Massachusetts and even New Hampshire residents aren't fully tuned in to the advantages of the New Hampshire living.   See my post on top 20 reasons to live in NH.   Sure, the commute is a bit longer if you are heading south but the traffic between the NH border and 495 is relatively easy as compared to downtown Boston.

So, take a look and let me know your thoughts.   And if you are interested, check out our awesome homes at Skyview - where by the way you can see the Prudential center from the top of the hill!

This post originally appeared on The John Gargasz blog @

Friday, May 2, 2014

Top 20 Reasons to Live in New Hampshire

I am an avid supporter of the burgeoning startup ecosystem in New Hampshire through 10X Venture Partners, the Granite Fund and Techout NH.  I am also active in the local real estate market and we just launched a new residential subdivision  -  Skyview.  It strikes me that the message of everything NH has to offer doesn't get out enough.   This post talks to the well known and lesser known benefits of New Hampshire living.     

New Hampshire reaches national prominence once every 4 years with the first in the nation presidential primary.   While we may fade from the national consciousness between elections, New Hampshire is a phenomenal place to live with close proximity to Boston, the mountains and the ocean.   The Live Free or Die state has the lowest tax burden in the nation as a percentage of gross income but that's only part of the story.  Here are a number of other great reasons to consider the New Hampshire lifestyle - many of which will likely surprise you:

1   Sales Tax
New Hampshire has no general sales tax.
Source: NH Department of Revenue Administration
2   Income Tax
New Hampshire has no general personal income tax. Dividends and interest are taxed at only 5%.
Source: Bankrate
3   Capital Gains Tax
New Hampshire has no capital gains tax.
Source: Area Development Online

4   Small Business
New Hampshire is friendly to small businesses and entrepreneurs. New Hampshire is frequently among the top 5 in nationwide rankings of business-friendly states.
5   Median Household Income
New Hampshire's median household income of $62,647 is among the highest in the country.
Source: US Census Bureau
6   Low Unemployment
As of March 2013, NH unemployment is 5.7%; US average is 7.6%.
Source: US Bureau of Labor Statistics
7   High-Tech Jobs
New Hampshire is ranked 9th in the nation for percentage of high-tech jobs.
Source: TechAmerica
8   Retail Benefits
Retail businesses benefit from proximity to Maine, Vermont, Massachusetts, Connecticut and Canada as residents shop in New Hampshire to benefit from the lack of sales tax.

9   Quality of Life and Livability
New Hampshire has been ranked #1 in the nation for quality of life and livability 5 years in a row.
10   Safety
New Hampshire is the safest state in the country.
Source: CQ Press
11   Health
New Hampshire is the 3rd healthiest state in the nation.
Source: America's Health Rankings
12   Health Care Quality
New Hampshire is ranked 1st for health care quality.
Source: Federal Agency for Healthcare Research and Quality
13   Highway Safety
New Hampshire has the 3rd fewest fatalities per 100 million miles driven.
Source: Reason Foundation
14   Child Well-Being
New Hampshire is ranked 1st nationally in the index for child well-being.
Source: The Annie E. Casey Foundation
15   Vehicle Ownership
New Hampshire is the least expensive state in which to own a vehicle.
Source: Forbes
16   Schooling Options
New Hampshire offers many private/non-government schooling options, including home schools, Montessori schools, Waldorf schools, religious schools, boarding schools, and traditional private high schools.
Source: GreatSchools
17   Standard of Living
New Hampshire has the highest standard of living in the country (based on poverty rate, 2011)
Source: PSNH
18   Quality Education
New Hampshire 4th graders ranked 1st place in a national science assessment test.
Source: WCAX
19   Outdoor Activities
New Hampshire offers outdoor activities throughout the year, including biking, bird watching, boating, camping, climbing, fishing, golfing, going to the beach, hiking, horseback riding, hunting, skate boarding, skiing, and snowmobiling.
Source: NH Outdoors

20   Hiker's Dream
NH is a great place for hikers, boasting 48 mountains with peaks higher than 4,000 feet, access to the Appalachian Trail, and numerous trails of various distances and difficulties throughout the state.
Source: NH Outdoors

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