Downsizing in Retirement: Great Idea, Not Without Its Costs

We're in the process of doing just this action -- downsizing and disposing of what we now see as excess. It's been said often here at TR, that offloading what you think as precious, valuable and/or worthwhile is difficult, time-consuming and disappointing -- it is! Expect to get much less than you think things are worth and that few (especially family) really want your stuff. Consider finishing the process by engaging a business that comes in and does much of the work for you (including pricing at rock bottom prices) for a big cut of the "profit". A business that will also remove the leftovers for auction or disposal.

There are some on TR who know of me from past posts who may be surprised that I'm changing my plan to only leave the home I designed, helped build and have lived in for 30 years by going out feet first. After years (10?) of searching and investigating, my wife found a perfect townhouse for us in nearby Fearrington Village. Two levels, yes, but upstairs are only two extra bedrooms and a bath. The main level and primary living space includes the master bedroom, 1-1/2 bath and a sunroom all with more room than our primary living space here. (It's still a downsize from 2900 to 2000 SQ ft.) We close on the townhouse tomorrow. The moral of the story is to keep at it -- persevere. The right place is quite likely out there.

Last thoughts on this topic. Buying a house today is not what it was 30, 20 or even 10 years ago -- especially for retirees. Be prepared for seemingly endless demands for more and more documents and proof. Incidentally, my careers were based on getting things done and reacting quickly to issues. From discovering our townhouse to closing took us 7 weeks and 2 days despite all the "issues". Be engaged.

RichPB - congratulations on your move! I first read about Fearrington Village here on TR years ago and took a tour about 10 or 11 years ago. I found it to be perfect except that it is too far away from family and friends in CA so I continue my search for the right place back among them but it does indeed take perseverence and time (which is a good thing because what I thought was the "right house" a year ago has completely changed).

And downsizing. So hard these days because lifestyles have changed and no one is interested in so many of the things that have been collected over the years. There comes a time when the dish fetish has to be put to rest.

Rich, it’s off-topic here, but I’d love you to write an article about adjusting after your move, since so many of us are in your situation and still hesitating to leave a house/yard that we’ve loved for decades.

As for downsizing, I’m in the minority and love getting rid of stuff, and don’t want to leave a nightmare for my daughter like my parents left for me. In fact, I wish more people would downsize before putting their sale photos on Zillow. The outdated furniture, heavy drapes, tired carpeting, and clutter makes me want to run.

I have previously commented on downsizing here before. We did so last year and in sum, start early, be ruthless in deciding what to keep and don't expect your children to want much of anything - they won't.

What I want to comment on today is the "Misunderstanding the Market" part of this article. I can attest to the great changes happening in the real estate market in just the last year. We sold our large house in one weekend at a price our agent thought was excessive. However, we had done many updates to the kitchen, baths and floors. I highly recommend that you check with your agent to see what is needed in your area in the way of updates to assure a quick sale. Buyers want move-in ready houses and don't want to bother with the cost and inconvenience of doing the renovations themselves.

We helped purchase a starter house for one of are children last month and we submitted a contract on another starter house for another of our children yesterday. Many of the houses we looked at were previously rentals and were vacant. In this particular market segment, investors were trying to unload their rental properties and multiple price reductions were evident on almost all of these properties. The loan interest rate increases have really impacted first time buyers and the sellers can only do modest updates with home prices falling. Mostly what we were seeing updated at this price point was installing new flooring using something called "luxury vinyl planking", a product I was not familiar with previously.

If you are selling a large home and netting substantial cash, now is the time to purchase that right sized house. You will have much leverage over sellers by offering a cash sale and asking for terms that were not being considered at the peak of the recent market top.

It’s tough to find a downsized replacement house. It has been easy to sell your old house, but finding a replacement is difficult. We sold in early 2019. But we are still looking for a downsized replacement. Places are either old and in need of total renovation or are new but in a terrible location. In either case, prices are a ripoff. Buyer real estate agents are of little help.

In the meantime, you have to find a decent rental, which is also very difficult.

Over the past several years I've seen at least a dozen real estate flips in my neighborhood. Contractors or other investors buy a dated house, pretty it up with updated kitchens and baths, put in new appliances, add the vinyl faux-wood planking LS mentioned, maybe even a whiz-bang security system, and a new roof, slap on a coat of paint, and literally charge $250K (and beyond) more for the house than they paid for it. Sometimes more than that. It's crazy.

The house across the street (1500 SF house on an 8000 SF lot, inexpensive wood fencing, no pool, 3 br, 2-1/2 ba). The contractor bought it in August for $870K, added the upgrades I mentioned above, and last week it closed escrow for the asking price of $1.2M.

Yes, the contractor added to the house's value, but he didn't spend anywhere near $330K in labor and materials, believe me.

For as long as DH & I are both alive, able to maneuver in our single story home, and our children remain nearby, we plan to stay put. (God wiling and the creek don't rise.)

If one passes the other will choose what to do next with the help of our kids. For now, we have no intention of lining a flipper's pocket - either on the sale of our home or the purchase of another.

In 2015 we bought a condo in Arizona to retire to. But we made the mistake of selling our condo in Boston, MA. This past year we decided we were just too far away from our families and wanted to move back. Well, surprise. We could no longer afford the prices back in Boston. Since the pandemic, prices there have exploded with Boston now being the second most expensive city besides NYC. We were/are pretty devastated. We ended up buying a condo in a retirement community in Amherst, MA. Western Mass is ALL we could afford. I hope we will be happy there. It is a 2 hour drive to see our kids. I don't know how long we will be able to even drive that far but it is better than flying all day, once every three years to see them. It has been a nightmare for us. And the cost of moving cross country are insane. My advice, do NOT be so quick to move in retirement. This is not the easy retirement our parents had. Be a snowbird but don't sell your home.

We bought a condo a few years ago which was a good process and we did downsize all of our stuff and the size of our new digs. A cost we didn't think about was when our 2 kids and grandchildren came to visit. There is not enough room for everyone and although it only happens 3 or 4 times a year when both familles are here at the same time, we get a couple of nice hotel rooms to put them up. And with grandchildren getting older I can see that we will need to get more rooms in the near future. We want to do this for them and it is worth it to us but it wasn't something we thought about when we moved to a small 2 bedroom condo.

Good advice from Alexandra and Roberta.
We are currently considering moving to the west as our kids live in Northern California and Portland. We could sell our home here and move but I realized coming from a large home, we definitely need 3 bedrooms and/ or a loft. That May be something we can afford in Portland if we look hard enough, but in San Francisco- no way. We’re thinking now that while we’ve always been homeowners this may be the time to rent, at least until the market cools down.

Alexandra, your decision to downsize to a 2 bedroom will probably work out for the best. Had you bought a 3 or 4 bedroom place, the purchase price may have been many thousands more, and your monthly HOA fee would be higher. With the money you saved not buying a bigger place, you should be able to comfortably and occasionally put up in other lodging some of your family when they visit, and 2-3 might still be able to stay with you. The rest of the year, you can then live in the place that is just the right size for you,

Alexandra - An additional thought. If you all wanted to be together in the same place, you could rent an Airbnb-type lodging in or near your area that would hold all of you.

Clyde, thank you! That is really good advice for many! Buying extra space for occasional need is expensive -- especially over the long term (taxes, utilities, etc.). And I'll be blunt, at 75, I welcome visits from family even with young ones, but I don't want to have to endure the general chaos in my home on a constant basis -- even just overnight. I want to be able to enjoy their presence and see them off while looking forward to the next visit. I'm a grumpy old man and I want to wake up at my own time and on my own terms, then smile and be grateful to see them all a bit later.

I'll add to my last post. When we visit family, I prefer to stay at a motel or whatever, not be any overnight burden and enjoy their welcome. We've done this for one or two nights or for a week and you can see the relief in their eyes knowing it's a visit, not a temporary move-in. Certainly cost is a factor and definitely not everyone feels the same, but it's well worth considering.

Thank you twice Clyde! Your first post put things in perspective and made me feel good about our decision because you pointed out the upside to our move and you are right, most of the year our small place is just right. Your second post about an airbnb was something we hadn't even thought about and think it is an idea worth looking into and everyone could be together!