Pros and Cons of Downsizing

The Pros and Cons of Downsizing in Today's Real Estate Market

Despite our more-is-more culture and the fantasy of thriving in an HGTV-inspired reality, not everyone wants to live in the biggest house on the block. For many people, the time, energy and cost of upkeeping a property with significant square footage feels like more of a burden than a blessing.

But does that mean you should put up the For Sale sign and pursue greener pastures on a much smaller footprint? It depends. Keep reading to learn the pros and cons of downsizing your home in today's real estate market, and you'll have all the information you need to make the right decision for you.

What are the pros of downsizing a home in today's real estate market?

The biggest perk of moving into a smaller place is that you get less, in a good way! Fewer rooms translate into less cleaning and upkeep. The same goes for a small yard. If mowing the expansive lawn has become a great way to ruin a Saturday afternoon, you might consider trading it for a place with a postage-stamp sized green space and call it a day. Better yet, you might consider letting the HOA at your new condo take care of it for you.

There's also the benefit of spending less cash on utilities. Smaller spaces are much easier to heat and cool, which means you can cut your energy bills significantly. Other costs get slashed when downsizing, too. Property taxes and insurance payments drop alongside square footage, so smaller homes mean a smaller spend overall.

One way selling a large home gets you more, however, is in the equity. While it's important to consider all the implications of swapping a big house for a smaller space (implications we'll be sure to detail below), it might be the right move for those close to retirement or anyone who could benefit from a significant infusion of cash.

What are the cons of downsizing a home in today's real estate market?

Perhaps the most obvious downside to downsizing is that you have less space. This means all the stuff you've been throwing into the crawl space could need to find a new home, not to mention the fact that you may no longer be the host with the most spacious place for entertaining guests. And if you have a hobby that takes up a lot of room? Well, you might find yourself moving it onto the dining room table in your new digs instead of letting it take over the bonus room in your old house.

Another factor to consider is that selling a big home doesn't automatically mean astronomical profits. Often, buyers who recently sold a large home are trading a low (or no!) interest rate for a much higher mortgage. Then, there's the moving fees, closing costs, down payment and everything else that goes into living somewhere new, all of which can cut into the money you made from selling.

Buyers should also be aware that smaller properties aren't always synonymous with smaller listing prices. Condos and townhomes, especially those in trendy, high-demand areas, have become increasingly expensive. That's one thing if a smaller place is your dream home and in alignment with your future goals. It's another if you're hoping to downsize a home and make a boatload of money in the process.

Is downsizing the right move for me?

It's important to do your research to see whether trading your larger home for a smaller property is a sound financial decision for you. A qualified real estate agent can help you make this determination by showing you what's available given your ideal outcome and unique financial situation.

They'll be able to pull comparison properties that not only give you a good sense of what you can expect to make off a large home like yours, as well as what the going rate is for a smaller place that checks all your boxes. They'll also be able to run the numbers for you, so you can have a clear-eyed understanding of what you'll earn versus what you're likely to spend.

The final decision is still up to you. Choosing to downsize is a personal choice, after all. That's where working with trusted real estate professionals like our team makes all the difference. We've hosted multiple "Downsize to the Right Size" workshops to help people figure out the best path. We can help you weigh your current situation against your future goals, using a thoughtful assessment and our local market knowledge to find the solution that fits. And if your move calls for more than real estate expertise, we can connect you with other trusted resources, from lenders to move managers, so you can make the move that's best for you. Whether that means staying put or taking a less-is-more approach, we're here to help every step of the way.