Is downsizing on the decline? Relative to earlier generations, baby boomers are holding onto their large homes, defying expectations. Given many older Americans' limited retirement savings, this trend is especially intriguing. Why not sell your home, buy a smaller place, and pocket the difference in prices?
One cause is market conditions: First-time buyers are increasingly seeking smaller, centrally located homes. With smaller properties in high demand and limited interest in large, suburban listings, the prospect of downsizing may not seem appealing.
So who chooses to downsize, and why do they choose to do so? To find out, we surveyed over 1,000 individuals who had downsized their homes, analyzing the experiences of every age group. What drives people to opt for smaller homes, and do they ultimately long for the homes they left behind? Keep reading to find out.
Deciding to Downsize
When it comes to downsizing motives, money rules supreme: In each generation, the desire to save money was the leading reason people moved to smaller homes. This cause was especially common among millennials, who were 20 percentage points more likely than baby boomers to cite money as a reason for downsizing. This finding reflects each age group's fiscal stability: In terms of wealth and income, millennials are far less financially secure than their elders. Accordingly, moving to a smaller home may be particularly prudent – or necessary – among this age group.
Conversely, baby boomers were more likely than millennials to describe a surplus of space and the associated maintenance as reasons for downsizing. These data points relate to the departure of children: Nearly a quarter of baby boomers said they looked for a smaller place because their kids moved out. However, because a number of millennials still reside with their parents, this downsizing opportunity has yet to arrive for many families
Baby boomers were also most likely to downsize due to a wish to reduce clutter. While having a larger home doesn't automatically equate to disorganization, it's certainly simpler to manage a modest space. Choosing a smaller, clutter-free space could have serious benefits: Many studies show that messy living quarters can compromise one's mental health.
People who downsized often did reap financial rewards: 62% said spending less was a major upside to their move, while 50% described the ability to save more money as a major benefit. Additionally, 20% became closer to their family or friends as a downsizing advantage. Perhaps downsizing permits some people to trade size for location, choosing a smaller home in a central area near loved ones.
Yet, many downsizers voiced complaints as well. Half of respondents said the need to get rid of possessions was a major challenge. Unfortunately, this process often requires a ruthless approach: Experts suggest downsizers toss anything they use less than 80% of the time and to avoid relying on storage units. Additionally, nearly a fifth of downsizers said their move took them farther away from their family or friends in distance, while 12% said their new space felt lonely.
Understandably, 31% of downsizers said the loss of space was their greatest challenge. Many also said that having less room meant a loss of privacy. Strikingly, 23% said their downsizing entailed moving in with their or their significant other's parents. Researchers say that economic conditions are forcing more families into these intergenerational arrangements – sometimes to the chagrin of all involved. It could also be because of broken relationships.
Considering the Kids
Any move affects all family members, and children are often the most reluctant to leave their homes behind. When we asked parents who'd downsized about their kids' views on the move, they reported a wide range of reactions. While 43% said their kids were excited, 38% said their children were saddened by the downsizing. Fear or anxiety was also a common response.
Often, downsizing subjected children to other kinds of change, such as making do with less space, paring down possessions, and starting a new school. But nearly a third of parents felt closer to their kids after making the move. Indeed, some researchers contend that interaction is key to fostering a close-knit family, and smaller homes encourage loved ones to engage with each other.
For parents with adult children, however, downsizing sometimes signaled the end of sharing a home with their kids. However, these parents typically conducted the transition slowly, waiting to downsize until five years after their kids had moved out. Moreover, empty nesters usually had room for their children to return: 93% had space to accommodate at least one child overnight. Plus, most downsizers with adult children said they chose their downsized location based on its proximity to their children – although such proximity can sometimes cause problems.
Where are smaller homes particularly affordable, making downsizing more desirable? The answer depends on just how small you're willing to go. For buyers willing to make do with 1,000 square feet or less, Tallahassee, Florida; Tucson, Arizona; and Madison, Wisconsin, offer the best deals relative to median incomes. Moreover, college towns like these are great places to retire, offering cheap living and plenty of cultural attractions. For those seeking slightly larger condos, Reading, Pennsylvania, presented the best deals, and local experts say buying in this affordable market is a wise investment.
At the other end of the spectrum, small places were exceptionally expensive in certain cities (relative to average incomes). In the Colorado cities of Breckenridge, Steamboat Springs, and Boulder, average prices for condos of 1,000 square feet or less were at least four times the median household income. More generally, these cities are among the most expensive real estate markets in the state.
For condos between 1,000 and 1,500 square feet, Ocean City, New Jersey, offered the least appealing prices. Its much-loved beach and boardwalk make it a retirement and vacation magnet, sending condo prices soaring. In a somewhat surprising finding, Oxford, Mississippi, was the worst place to buy a condo between 1,501 and 2,000 square feet. Although Mississippi offers some of the nation's most affordable home prices overall, the average home in Oxford sells for nearly $400,000.
Downsizing to Upgrade?
Our results indicate that downsizing is typically driven by practical considerations, including financial incentives and a sense of unutilized space. Yet, the ramifications of these moves are frequently quite personal, and many who downsize miss their former homes. Indeed, many of the most powerful factors in downsizing don't directly concern space. Even if a smaller home makes sound financial sense, are you willing to move farther from loved ones or leave a beloved house behind?
On the other hand, these findings suggest that size alone does not matter: If you can find a home that suits your personal and social needs, square footage is a lesser concern. Will downsizing bring you closer to the people you care about? Could a slightly smaller home actually help your family spend more time together? These considerations matter more than a home's basic measurements.
At Homes.com, we specialize in combining a data-driven approach with a personalized touch. Our platform offers an unparalleled array of accurate listings in your area, while our guides and tools allow you to tailor your search. No matter the size of your ideal home, we're here to help you find it.
Data for this study originated from a survey we ran on the Amazon Mechanical Turk platform. The survey had a total of 1,011 people. To qualify for the survey, respondents had to say they downsized from a house to an apartment or condo or from a house to a smaller house.
Relevant demographic information:
Not listed: 3
Baby Boomers: 201
Generation X: 401
There was an attention-check question located about halfway through the survey. If respondents failed, they were disqualified, and their responses were excluded.
Outliers for the average number of years respondents spent in their previous homes were removed from our analysis.
For "Best and Worst Cities for Downsizing," we gathered median income data from the 2017 U.S. census and combined it with internal Homes.com data to find the best cities to downsize when retiring. For a metropolitan area to qualify, it had to have a sample size of at least 50 listings for each of the floor plans listed in our chart. From there, we calculated the price-to-income ratio for each metropolitan area to determine the most affordable areas for seniors to live relative to the median household incomes there.
We're not able to analyze every metropolitan area in the United States because not all metropolitan areas have at least 50 listings for each of the floor plans listed above.
The survey portion of this study relies on self-reported data. Several issues come with this sort of data, including but not limited to the following: exaggeration, selective memory, and telescoping. We can't be sure as to how closely this reflects reality.
Fair Use Statement
In this study, more than a third of downsizers said they felt relief once they moved to a smaller home. Know someone who might similarly benefit from downsizing? Feel free to share our data with them. However, please use our work only for noncommercial purposes and link back to this page whenever you share this project. Doing so will allow your readers to explore the full breadth of our research.