Downsizing has long been associated with empty-nesters looking to close the void of their children’s absence, but in recent years, as the concept of minimalism has stormed society, downsizing has become attractive to just about everyone with the privilege to consider it. Downsizing is appealing for a few different reasons including its promise of financial savings.
“Less space means less money, less maintenance, less hassle and less carbon footprint, which is becoming a real priority for people,” said Daren Herzberg, a licensed associate real estate broker with Compass in NYC. “And the smaller the space, the easier it is to decorate and make extra special for less money. The saved money can then be spent on quality of life items that contribute to one’s overall happiness like travel, education and fitness. Excess is out; quality is in.”
COVID-19 Has Changed The Way We Evaluate Our Homes
The pandemic may also play a factor here, not just because people have been struggling to pay their rent and bills (which alone can cause one to reevaluate the wastefulness of unfilled space), but because, we’ve been reminded of the value of intimacy having gone more than a year without being able to get close to people.
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“Humans are social creatures who crave company, closeness and warmth,” said Herzberg. “I can’t tell you how often I enter a huge apartment or house and the entire family is hanging out in the den, which happens to be the smallest room in the house. People value intimacy, which is better in smaller spaces.”
There’s Insane Demand For Single-Family Homes Right Now
If you’re among those who feel that a smaller space is worth it not only for your wallet, but for your lifestyle, then you should absolutely put your too-big-for-you home on the market ASAP. Buyers are hungry for new listings, particularly houses.
“If you have a single-family home and want to downsize to a condo, now is the time,” said Tomas Satas, founder and CEO at Windy City HomeBuyer. “The condo market is lagging behind single-family homes because people are seeking more space. Selling your home now will get you top dollar, maybe even 50% over asking price, and you can buy a condo or townhome in a much cooler market.”
Your $400k Home Is Probably Worth $520k Today
Because buyers are rushing to upsize in this flaming hot real estate market, prices have shot up, so downsizing works tremendously in your favor.
“It actually makes more sense to downsize than to upsize,” said Brian Davis, a real estate investor and founder at SparkRental. “You get to cash out your larger, more expensive home at peak pricing, and even though you also buy a home at peak pricing, its lower cost means it’s risen by less.”
“Imagine for the sake of argument that home prices in your market have risen 30% in the five years since you bought a home for $400,000,” Davis continued. “You sell your large suburban home for today’s pricing of $520,000 (30% more than the $400K you paid), and you buy a home for $325,000. That home’s price has also risen by 30% over the same time span: five years ago it cost $250,000. But the less expensive home has only risen by $75,000, while your larger home has risen by $120,000. You come out ahead, and can put a huge down payment on your new, less expensive home.”
Maintenance Costs Will Plummet
You’ll see significant savings in downsizing not only when selling your current home, but over time in your next home, in the form of lower maintenance bills.
“The best reason to downsize your home now is to reduce the utility bills and maintenance cost,” said Johell Aponte, owner of Move On House Buyers in Houston. “Monthly incomes during the pandemic lockdowns have shrunk. So, it is better to downsize your home to reduce your expenses.”
Bringing down the cost of monthly bills could be particularly important if only because we’re spending more time at home now, with many of us permanently working from home at least part-time since the onset of the pandemic, possibly resulting in a spike in utility charges. Additionally, now that we can finally get out of the house safely (if fully vaccinated), we can do things like travel and dine out again. We might want to be putting our dollars towards excursions rather than toward our mortgage and/or our home maintenance costs.
“The process of staying home shined a light on what really matters in terms of space, usage, and location,” said Jenn Newman, realtor at The Brokery. “We have seen many clients relocate because they were able to work from home permanently, and many have decided to choose where they want to live vs. where they had to based on work locations. We have also seen many clients downsize in order to afford more travel, more time away – also byproducts of the pandemic. Many sold their larger properties, opting for a ‘lock and leave’ in town, affording them the ability to travel with frequency, and giving them peace of mind with a low-maintenance property that could easily be left for longer periods of time.”
If It’s Been On Your Mind, It’s Time
Downsizing, with all its sensible allure, doesn’t just happen with a snap of one’s fingers. It takes time, work and a willingness to part with space and stuff that you may have previously taken for granted. It also requires moving, which is a whole other ball of potentially stressful wax. Whether now is the right time to downsize, really comes down to how you live, how you want to live and perhaps most importantly, whether this is something you’ve already been pondering.
Or, as Satas puts it: “If you’ve been thinking about downsizing your home, now is the time.”
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Last updated: May 27, 2021