Many Americans find themselves downsizing, motivated by debt, from the nest getting emptied or retirement. Moving to a smaller home or condominium may have some surprising benefits. However, determining how much smaller to go can be tricky.
Finance guru Dave Ramsey says the average family in America has “plenty of room to downsize their home without cramping their style.” According to the United States Census Bureau, Ramsey elaborates that in the 1950s, middle-income Americans homes were around 1,000 square feet or less, as opposed to today’s typically 2,600 square feet plus – new single-family home. If you are thinking about downsizing to a smaller home or condominium, here are some good reasons, and some decisions to weigh about your space needs.
10 Reasons to Downsize
- Smaller residences come with less space to take care of. A home takes a large amount of time, energy, and effort to maintain it. Therefore, a smaller home requires less of your time, energy, and effort to accomplish upkeep and cleaning tasks.
- Have more time to travel. A place that requires less upkeep may make it easier for you to take off and travel.
- Smaller places have less stress associated and free up more time. For many, the more we own, the more we feel owned by our accumulations. More mental energy is spent on having more things to maintain and this includes the largest asset, our home. Buying small allows more mental freedom, a huge benefit of minimalism. If you purchase a condo, you may get large wish list items, like a communal pool or a gym, without having to care for them.
- A condo or small home require less décor and seasonal accessories. Again, this means less work and headache for the owner, as well as less storage space needed.
- Smaller residences are less expensive, bring less debt and risk. Less space can lower insurance, taxes, heating, cooling, electricity, etc. Many advisors will suggest using a formula based on net income, savings, current debt, and monthly mortgage payments. Most of these say we should spend “28% of our net income on our monthly mortgage payments.” However, if we can live financially stable and happier in a 15% spending bracket, then why not?
- Smaller spaces produce less environmental impact. Fewer resources are required to build and maintain a smaller home, or a multi unit condominium building, and that benefits the environment.
- More compact spaces can create stronger family bonding. More social interaction among the members of the family happens with less space between. While we sometimes need more space, having a closer physical connection to other members will strengthen ties naturally.
- Smaller homes compel you to remove clutter. Moving into a smaller home forces you to be clear on what items serve you and your family. Channel your inner Marie Kondo, be intentional and let go of emotional attachments or unfinished business.
- Smaller residences have more market potential. A more affordable home has a larger percentage of the population that can afford to buy than a more expensive house.
- Downsizing can create a nest egg. Homeowners selling a larger home often have a substantial financial gain from the downsizing difference. While a great benefit, consult your tax advisor ahead of time to lean how to account for this windfall.
Things to Consider Before Downsizing
Before going ahead with a significant downsize, think through these questions to determine how much space you actually need.
- Do you need a home office space to work remotely?
- Does losing an extra space really become a hardship when visitors come, or children/grandchildren may return? How often do you actually have overnight visitors?
- Do the existing furnishings fit into a smaller space or will some furnishings have to be put into a rented storage unit or sold?
- Does the smaller home or condo reside in a community with a homeowners association, which may require HOA fees?
- Do you really need the extra spaces for clothing, crafts, sewing, keepsakes, etc, or could these items be accommodated with better storage solutions?
- Since individuals often downsize to simplify their lives and/or enjoy new pursuits, ease of upkeep should be carefully considered. A smaller home with a large yard or extensive landscaping may not meet certain goals, but a condominium may. How much exterior and interior maintenance will be required in the smaller space you are considering?
- Couples should think of their privacy needs in a smaller space. Are quiet, private, interior spots important to have some alone time? What is needed to maintain your relationship?
Expanding households may be looking to move up to a larger home. This creates availability of smaller residences for those that are downsizing, or want to live a simpler life. If you are interested in selling your larger home, let us know. We would be happy to research options with you for a smaller residence or condo.