According to the National Association of Realtors’ Generational Trends report, a growing number of retired people are either downsizing or considering downsizing their homes. What’s more impressive, The Star reported that young homebuyers aged 25 to 34 are also downsizing in significant numbers.
What is downsizing, exactly? What are its benefits and drawbacks? And what steps can real estate consumers take to streamline their downsizing process? This guide explores the ins and outs of this popular real estate trend. Whether you’re a newcomer to the concept or have been considering it for a while, find the answers you need below.
What Is Downsizing?
Simply put, downsizing involves selling a larger home to move into a smaller one. People typically downsize in an effort to reduce maintenance burdens, reduce costs, adapt to changing life circumstances (retirement, an empty nest, new mobility challenges), or all of the above.
While moving is always a challenge, downsizing adds an extra logistical layer, as moving the contents of a large home to a smaller one requires purging excess belongings.
The Pros of Downsizing
The benefits of downsizing are numerous and well-documented. Downsizing can help consumers reduce maintenance costs, utility bills, property tax, etc. If the seller owned their home outright, they can also pocket the difference in the sale price and purchase price of the two transactions. These reduced monthly costs and potential transaction windfall are particularly important to recent retirees facing new cash flow realities.
Beyond the strictly financial benefits, downsizing may offer emotional and physical advantages. Empty nesters might feel better suited to areas with similar age demographics and so will move to communities with smaller homes and older residents. Sellers of a certain age might also feel as though they can’t keep up with the sizeable demands of a family home: the yard upkeep, multi-story home maintenance, repairs, etc. Similarly, sellers facing new mobility challenges might opt to downsize to a smaller, single-level, and more accessibly built home.
The Cons of Downsizing
As mentioned, downsizing is a logistical challenge. Moving from a large family home to a smaller home required decluttering, purging, and careful move management. Some sellers aren’t ready to part with their excess items (many of which contain immense sentimental value), which makes the downsizing process a tricky emotional transition. Conversely, some downsizers end up renting a storage unit to retain their excess belongings, which offsets their cost savings.
Additionally, you have to contend with an obvious consequence: You have less space. That’s less space for hobbies and activities, less outdoor space for gardening and relaxation, and less dining room/living room space for entertaining family and friends.
How to Pull It Off Successfully
Let’s say you’ve weighed the pros and cons and decided to go for it. Your first step is to hire an experienced agent with a proven track record on both sides of the transactional divide. You want a listing agent who can effectively market your home to reap its maximum value potential. And you want a selling agent (ideally the same agent) who will work tirelessly to find good deals that match your criteria.
Beyond that critical partnership, you might also consider contacting a declutter service and move management service to help you cull your belongings, pack, and establish workable storage systems at your new home.
Before taking the dive, talk to as many people as you can. Talk to friends who have downsized. Talk to family members who share emotional attachments to the old family home. Talk to the best real estate company you can find. And talk to your financial advisors about the money side of the equation.