Trading Down

Whenever buyers purchase a home that is less expensive than the one they currently reside in, this is referred to as trading down. This is sometimes done when homeowners occupy a residence that is too large for their current needs; this is often the case with empty nesters. It can also be done whenever individuals decide to move to a smaller home in order to reduce their monthly living expenses. An example of trading down is this: Mary and John own a home that is worth $250,000. They hope to sell that home for its face value and are looking to purchase a home that is in the neighborhood of $150,000 to $200,000. Mary and John are trading down because their new home will be worth less than the one they are currently living in.