No Benefit To Downsize

That’s a picture of the pool house in our neighborhood. Our development is a great place for raising kids, although we are out of that business now. Other people our age are starting to move to smaller places. Sometimes we feel like we should downsize too, but I don’t think the benefits play out very well for us in today’s housing market.

We’ve looked around. We have a local custom builder that we really like and have been tracking his villas for some time. They are about 3K square feet and are designed well for empty nesters. He has a handful of existing and new developments in our area. We’ve often said, “If we could find the one at a good price – on woods or water – we should buy it.”

The problem is they are now selling for about 85% the value of our current home, which after closing costs wouldn’t net us more than $25-$50K. Baby boomers are apparently rushing to downsize and pushing up prices on these villas. And what would we get? We would give up 2K square feet of living space, a large yard, and peaceful wooded view. That’s not a great proposition.

We also do not need to be in a hurry. We are fortunate in that when we designed our house 12 years ago, we put our master suite on the main level, built wide staircases, have wide doors, and a minimum of stairs to get in the house. It has maintenance-free materials, although we do our own yard work / snow removal. We could hire that out, if needed, in the future.

In the end, it only makes sense to downsize if it saves you money, time, or you need to accommodate aging. I don’t see any of those benefits now, but I’m sure that time will come. The good news is – in the meanwhile – I’ve been picking up some great deals on hand and garden tools from my family & friends that don’t have room for them anymore!

How are you thinking about downsizing? What would be the triggers for you?

Image Credit: (c) MrFireStation.com

22 thoughts on “No Benefit To Downsize

  1. We were in your exact spot and considered that same villa builder. While that would have been 50% less space for us, it was still more than we needed. So we opted for a 2200 sq ft place just over 33% of our old house. Then we remodeled it to fit our tastes. It was much less expensive to do that. Still enjoying huge savings on utilities, taxes, cleaning, maintenance etc. We do have a cabin/house and we can lock and leave anytime to just go which we do 2-3x @ month year round. We’ve found the cabin + townhouse costs are still under the “big house” cost with more flexibility. Something to consider if you get serious about your Florida dreams.

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  2. Bake California Proposition 13 locked property taxes, huge taxes on capital gains and realtor fees into the equation and it makes zero sense for me to down size.

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    1. I bet! I know that Prop 13 really makes it advantageous to stay where you are in California. I wonder if that was fully understood when they passed it way back when.

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      1. For many, the Prop 13 “trap” has been eliminated by Prop 19, which passed last year. If you’re 55 or older (or a victim of a natural disaster), you can transfer the Prop 13 taxable value for your home to a new home, assuming the new home’s assessed value is less than or equal to your current home’s assessed value. Or, if the new home is assessed for more, the difference is added to your taxable value. This should allow many seniors/retirees to downsize without a property tax increase.

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  3. We downsized three years before retirement and I commuted an extra 35 minutes each way. We moved from 2400 SF on a 1/3 acre lot to a 1400SF condo which is two blocks from light rail and all shopping, restaurants, movies, theater and comedy club in walking distance.
    This is California and since we were over 55 we could transfer property tax basis from other property. Current assessed value is $780,000 but our basis is $425,000. Thus property taxes are $3500 less per year than our neighbors.
    We moved for quality of life and simplicity of living. We don’t drive often or far unless on a trip and downtown LA is twenty minutes on light rail.
    This works for our lifestyle

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    1. That sounds very nice. We’ll be out in LA in a few weeks visiting our son. He’s staying in Highland Park – NE of Downtown LA. I had a MegaCorp colleague that moved from the suburbs to the city a few years ago. She really liked it, although Downtown Minneapolis went from being a great urban setting to an ugly crime scene almost overnight. So sad to see.

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      1. Highland Park is a hip place to live, but years ago it was a dangerous place to go. We are in Pasadena and Highland Park is halfway to Union Station for us on Light Rail. We are at Lake Avenue

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      2. He worried about crime there. We found a website that shows crime by block group and he is in the very safe side of Highland Park. He’s going to stay out there an extra month, so we suggested when he looks for a new rental to drive over and check it out first hand.

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  4. We are no where near ready to downsize. We live 10 miles from the nearest town of about 950 people (yes, that’s only 950 people!) We have 5k sq ft house in the middle of 18 acres with a half mile of waterfront on a beautiful lake. We designed our house and property to age in place. My driveway is over a half mile long through a heavily wooded area, and I can’t see another house from our property. The only sign of humanity in any direction is the occasional airplane 30k ft straight up in the air or the occasional bass fisherman on the other side of the lake. Some day we may choose to return to society, but I’m hoping it’s in a pine box! 😜😆

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    1. Thanks to the run-up in the financial markets, it looks like our Florida Project will be completely separate from our house in MN. It looks like we don’t really need to free up any $$$ to do whatever we want in FL. We’ll see!

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    2. You have an amazing set-up – although I don’t envy that lawn mowing or snow plowing. I have a good friend who has a similar set-up here in MN. This past weekend he showed us a new ‘road’ he had someone Bobcat out to reach a private lake that he shares with only a few neighbors. We too have 5K square feet – which is a LOT for 2 people – but very nice on a cold winter day.

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      1. We definitely overbuilt the house in 2008, and with the kids now grown and gone, it’s definitely more space than we need 95% of the time. But it’s awesome on the holidays and long weekends when everyone comes home to visit. That was our original intention when we built… to always have a compound and enough space for everyone to come home and have big holidays and expanded summer lake visits without feeling like you’re always on top of each other. It works for us! 😉 It’s nice that your Florida project can be separate from your MN house from a financial standpoint. That makes pulling the trigger a lot easier. We will likely continue to do extended rents in FL during the winters for now. Good luck on the FL project it sounds exciting!

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      2. One of the areas we were interested in Florida is Lake Nona. It’s a growing suburb by Orlando. Now it was just announced that Disney is going to build a office campus there and move 2000 jobs from California. Housing in that area is going to go crazy!

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  5. It’s amazing to me that 3K sq ft is considered “downsizing.” That’s roughly twice the size of our house in CA! Although we can only “comfortably” accommodate 2 guests (using the murphy bed in my wife’s office), I’ve always seen that as a plus. 😉 Otherwise, I think if we had 3K sq ft (or 5K!!), we’d just fill half that space with junk instead of being forced to embrace our inner Marie Kondo.

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    1. Yes, I can appreciate that perspective! We do have 5K sq feet – which is huge for the 2 of us. At the same time, we go to Florida in the winter and rent a little 2-bedroom condo that is only about 1K sq feet. We can be happy in either, honestly.

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  6. Another wild card is future family changes such as grand children, relatives, etc. that may introduce a need for guest bedrooms and space!

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    1. For sure … we have some friends that downsized to a 2-bedroom condo on Seven Corners and had to get hotel rooms for their kids at Christmas. They moved back to a traditional house the next year!

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  7. We don’t have to downsize because we never up-sized. We have 2160 square feet in Tacoma, WA. We do have stairs, so we can’t age in place here and will have to move eventually, but we are only 51 now, so we have a few years to decide. House was built in 1962, and we’ve fixed it up to suit our tastes and lifestyle. Moving would be a pain at this point.

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    1. Stairs become the main limit for people living in their homes as they get older. My parent’s house (built in 1990) has very steep steps that turn as you go up. Those are tricky to navigate.

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