How to choose your right-sized next home
You've worked hard in your career. Your kids are now fully grown and living on their own. And you're eager to move on from your high-maintenance single-family home -- now filled with rooms you never use -- and live instead in a more manageable residence suited to your streamlined lifestyle.
Congratulations: You've reached the coveted downsizing phase of homeownership, and the perks are plentiful.
"This is the perfect time to downsize since you can receive the maximum return on your current home, thanks to the continued strong seller's market, while concurrently buying a possibly smaller and more affordable home," says Tomas Satas, founder and CEO of Windy City HomeBuyer in Chicago.
Only don't assume you have to settle for less square footage or compromise on build quality, finishes or location. The old paradigm of shoehorning your older self into a more compact and economical abode doesn't have to apply, the experts agree.
"Downsizing today no longer automatically means a smaller home. The emphasis on first-floor living and less yardwork remains, but many downsizers are increasingly choosing to move into adult living communities and condos, where they can take advantage of luxury amenities without the obligation of upkeep," says Malinda Rae Koncar, Realtor with Hermitage, Pennsylvania-based Berkshire Hathaway HomeServices The Preferred Realty.
"The recent rise in over-55 communities has made downsizing more attractive. Living in one of these neighborhoods can be like living on a cruise ship but without the seasickness. Everything you need is within walking distance or a golf cart ride -- a pool, clubhouse and new friends plus a multitude of activities," he says.
Another thing that's changed? The presumption that your forthcoming new home will be your last.
"People often assume that this next move is forever. But 50 is the new 30, and people are living longer and healthier lives today," notes Alison Bernstein, founder, and president of Suburban Jungle, a national real estate advisory and tech platform with a burgeoning "ReSizers" division. "It's better to assume a five- to 20-year stay in your next home and plan accordingly."
Lamar Brabham, CEO and founder of Noel Taylor Agency, a financial services firm in North Myrtle Beach, South Carolina, points out that a smaller next home may not be the best choice.
"That's especially true if your family is apt to visit often. One benefit of retiring is having the time to spend with children, grandchildren, friends and other family members. So having a house large enough to accommodate family meals, activities and sleeping quarters may be a good idea," says Brabham.
Market shortages are making downsizers second-guess their non-negotiables on their next dwelling, too.
"The most sought-after home for retirees is a ranch-style home with a first-floor laundry and minus the stairs. But the state of the market has 61% of Gen X and Gen Y vying for homes similar to what 32% of the boomer population is seeking, according to National Association of Realtors data from 2020," Koncar adds. "Competition on the rise means that retirees are settling for homes that may not meet their future needs without major renovations. Nearly 93% of the population is looking for move-in ready homes that are budget-friendly, which, of course, are appealing to seniors relying on their savings."
This is among the reasons why many downsizer candidates opt to stay put in their larger homes nowadays, deciding to wait things out until there's more inventory choice -- meanwhile investing in home upgrades and/or third-party home maintenance services.
If you're still determined to find a smaller home, "a great footprint for downsizers is usually between 1,000 and 1,700 square feet," says Kyle Cioffi, Realtor and team leader for Kyle & Sam -- Coldwell Banker Lifestyles in New London, New Hampshire. "I also recommend looking for open-concept kitchens and living spaces so that it doesn't seem like you've lost as much space after you've moved. In addition, make sure there is room in the attic, basement or closets for the items you can't part with."
While you shouldn't have to settle for a property that is below your standards, you also want to avoid being seduced by a location, features or amenities that can squeeze your budget.
"A good rule of thumb is to always live below your means, if possible. Also, rolling the dice from an investment perspective with your retirement nest egg is probably not prudent after a certain age," Brabham recommends. "Find a dream home that's affordable, avoid debt and protect your life savings; that way, you can cruise into the sunset worry-free."