Downsizing In Real Estate:
What Is It and When Is The Right Time To Downsize?
Most people dream of owning lavish mansions offering much-needed luxury and comfort. But there comes a time when they might consider moving to smaller homes, especially as they get older or are overwhelmed by high maintenance costs. Although downsizing might be the right choice at this point, it is also a challenge to those who need more preparation for a sudden lifestyle change.

For most homeowners, downsizing means less space and fewer expenses. However, knowing when to make a move determines whether you will realize your lifestyle and financial goals. Therefore, If you plan to sell your current home and move to a smaller house, here are a few things to know about downsizing.

What Is Downsizing in Real Estate?
Downsizing refers to moving to a smaller home requiring less maintenance due to limited space. However, the definition may defer based on individual reasons. For instance, one may downsize to simplify housing costs and not necessarily reduce the square footage. That means one may move to a new neighborhood with less home maintenance costs but still prefer the same home size.

Homeowners in their 60s or 70s may downsize to smaller homes for convenience and mobility. Others may also choose a home whose layout matches their new lifestyle, such as fewer bedrooms but a larger outdoor space for recreation and home gardening. Therefore, in most cases, downsizing has much to do with the new location, the cost of new property, and other factors driving the housing market.

When Is the Right Time to Downsize?
Several factors can trigger your choice to downsize. These include job loss, retirement, divorce, change in family dynamics, or desire for a simpler and quieter lifestyle. However, before you downsize, you must weigh available options and research the new location to ensure it fits your budget and lifestyle. It would help if you also looked for market signs that favor your decision, which Include:

1. Your Monthly Housing Expenses Rising Above 30% Of Your Income.
Housing expenses are rising yearly, with 2022 recording the highest number of homeowners spending more than 30% of their income on home utilities. If you have experienced a significant drop in your income, spending almost half of your income on housing costs is possible. Therefore, planning ahead of this possibility is vital, especially if you want to avoid getting a side hustle to supplement your income.
Downsizing can reduce your mortgage payment, utility, property taxes, and home maintenance costs. As a result, you will have more cash left over to save and enjoy your new life. However, you should consider other expenses that can quickly exceed your predetermined budget and reasons for downsizing. These include repairing the old home before selling, closing and moving expenses, upgrading, and furnishing your new home.

2. Your Home No Longer Fits Your Age
You might desire to age in your home and enjoy your memories. However, as you age, you realize your home no longer supports your needs. Therefore, you may want to move to a smaller house with features that make your life easier.

Some reasons that can trigger your move include:
· Long and steep stairs are making accessing upper bedrooms or living spaces challenging.
· Extensive walkways, lawns, and driveways that require frequent maintenance.
· High cabinets or storage spaces are becoming difficult to access.
· Too many rooms, windows, and walls that require cleaning.
· Bathtubs and showers with no grab bars.
Most seniors love to retire in single-story or one-level homes with wide hallways accommodating wheelchairs, no-step entries, and walk-in showers with benches. Others also prefer relocating closer to hospitals, public transportation, and social amenities. Therefore, since getting an
affordable housing that meets the needs of many older citizens is becoming a challenge; it is vital to plan for the change.

3. You Feel Isolated in Your Neighborhood
Downsizing also has social reasons, especially if you feel you are the oldest in your neighborhood. For instance, if you have lived in one location for a long time, you will likely see younger families
moving in and older families moving out or passing away. This can make you feel isolated; hence, moving to a retirement community can provide you with that social connection you lack. Downsizing to a senior living community can prevent age-related health issues and increase happiness. You can also access adult community amenities like golf and tennis courts, woodworking shops, billiards rooms, and senior games clubs. However, checking if your adjusted budget allows you to move and enjoy senior-living community services is crucial.

4. Your Job and Family No Longer Tie You to One location
Downsizing is not limited to retirees and restricted individuals only. Some people also choose to downsize because their careers and families no longer tie them to a specific location. For example, a significant population now works from home, allowing them to live anywhere they want, as long as they can afford it. Parents whose children are grown and live independently also no longer need to live in a specific neighborhood. This opens their choice to move to smaller houses in less expensive towns or cities. Others do not necessarily need to downsize. Instead, they prefer moving to new locations with less property taxes, utility costs, and higher appreciation rates.

The Bottom Line
Downsizing is an emotional and financial decision. Moving from a home where you have created memories for many years can be challenging. However, it can be the right decision if the housing expenses, social disconnection, and unused space no longer support your new life and income. Therefore, since no rule dictates when and why you should downsize, it is up to you to check your financial goals and reasons before switching houses.