
Real Estate Blog
How to determine if the time is right to downsize

The phrase "bigger is better" has endured for quite some time. Though it may be impossible to pinpoint precisely who coined the phrase, its lesson that larger things tend to be more valuable than smaller alternatives is applicable in numerous situations. But no adage is applicable to every situation, and in some instances people may find that bigger is not better.
Downsizing is an approach many individuals consider after turning 50. Parents who are empty nesters and others nearing retirement may wonder if the time is right to downsize from their current homes. Though that's a strategy millions of people have adopted over time, the decision is not always so simple. Individuals over 50 who are trying to determine if downsizing is right for them can consider a host of factors before making a decision.
- Monthly housing expenses: Before downsizing their homes, individuals should determine just how much they're currently spending on housing. Individuals who have fixed rate mortgages likely know the amount of their monthly mortgage payment, but what about maintenance? Home maintenance expenses fluctuate, but a careful examination of the previous 12 months' expenditures can give homeowners an idea of just how much they're spending to maintain their properties. The number may be eye-opening, as Thumbtack's "Home Care Price Index" released in the third quarter of 2024 revealed that the average annual cost to maintain a single family home reached an all-time high of $10,433. If such expenses are preventing homeowners from building their retirement nest eggs, then it might be time to seek alternative housing.
- Real estate prices: Real estate prices have skyrocketed in recent years, which can be both good and bad for current homeowners considering downsizing. Many people who downsize look to move from a single-family home into a condominium, where maintenance tasks are typically handled by a homeowners' association (HOA). Such communities typically charge HOA fees, which can be minimal or considerable. In addition, the price of condominiums has risen in recent years, with the lender New American Funding reporting in early 2024 that the median sale price of a condo reached $341,000. So homeowners who want to downsize their homes may end up taking most of the profit from selling their current properties and reinvesting it in a costly condo. Some may deem that worthwhile, while others may find the cost savings of downsizing in the current market are negligible.
- Emotional attachment: Downsizing may be considered with cost savings in mind, but it's important to consider your emotional attachment to your current home. Many homeowners over 50 raised their families in their current homes, and letting go of a property where so many memories were made can be difficult. Homeowners who are not prepared to move on from properties that are meaningful to them and their families can consider additional ways to downsize their financial obligations.
Downsizing is something many homeowners over 50 consider. Any decision regarding downsizing is best made after considering a range of variables.