Kiplinger Today

Buying & Selling a Home

The Upsides of Downsizing Your Home

Kyle Pierce

Mike and Patty Denevi, of Los Gatos, Calif., traded down to a nearby condo.

It can happen when the kids leave home or retirement looms or your first grandchild is born hundreds of miles away. You start to think about leaving a house that’s now too big for you and downsizing to a smaller house or condo or a retirement community.

See Also: Downsizing? Consider How You'll Finance a New Home

After launching three sons from their home of 23 years, Mike and Patty Denevi, both 61, of Los Gatos, Cal., shared an epiphany. “We realized that we spent all our time in our home’s kitchen and bedroom. We didn’t really need this house anymore. What were we doing here?” says Mike. “We thought, Wouldn’t it be fun to live near downtown?”

The Denevis listed their 2,056-square-foot home with four bedrooms and three bathrooms for just over $1 million in early 2011. (The Bay Area is the most expensive housing market in the U.S.) While they waited for their home to sell, they shopped for their next one. They found a 1,563-square-foot condo with two bedrooms and two baths on a single level that backs up to the high school soccer field. The Denevis paid $669,000 in cash after they sold their home for $950,000. They pay $680 a month in condo fees.


The Denevis are closer to their church and to restaurants and entertainment. The single level is a boon for Patty, who has arthritis. Mike, who works in commercial real estate, has a short commute—on foot—to his gig coaching high school baseball and his senior baseball league.

As the Denevis found, downsizing frees you from the cost and time commitment of maintaining a home that’s simply too large. It allows you to unlock your home equity, buy a new place and maybe even retire your mortgage.

After the real estate bust, many homeowners delayed the decision to downsize until their home regained at least some of its market value. Many more owners are ready to sell now. But clearing out and selling a home, buying a new one and relocating—whether across the street, downtown, out of town or across the country—is a major transition that takes careful planning.

Where to?

The decision to downsize may come in a flash, as it did for the Denevis, or it may require lengthy consideration. “Downsizing can and should be a fun, memorable time with your friends and family,” says Brian Schwatka, a real estate agent who leads a popular class called “Should I Stay or Should I Go?” in Silicon Valley.

The Santellas built a home in Sun City Mesquite near Las Vegas.

Kyle Pierce

The Santellas built a home in Sun City Mesquite near Las Vegas.

If you research your options, you’re less likely to get locked into a situation that doesn’t meet your expectations and leads to another move, says Skip Frenzel, a financial planner in Campbell, Cal. It often pays to find a real estate agent who works with seniors, such as an agent who has earned the Seniors Real Estate Specialist (SRES) credential.

Less space doesn’t necessarily translate into less money. For example, you may long to live downtown but find that condos are in short supply and priced out of your reach. Seattle agent Greg Bartell says many homeowners sell their homes for, say, $400,000 to $500,000 but find that they will have to spend at least that much for a condo in the city. He suggests that they look at newly redeveloped suburban town centers that offer urban amenities.

Kay Keesee, an agent in Austin, Tex., says downsizing clients often want a smaller home but no less luxury. They want a kitchen with a big island, granite countertops and stainless-steel appliances, and a master suite on the first floor. In newer but smaller homes with those features, the trade-off may be smaller secondary bedrooms and less storage.

You may find the lifestyle you want in an active-adult community or a continuing-care retirement community (CCRC). After Michael Santella, 63, retired from Oak Ridge National Laboratory, he and his wife, Peggy, 62, visited Sun City Mesquite, an active-adult community developed by Del Webb 80 miles from Las Vegas. The Santellas, who lived in Knoxville, Tenn., were avid travelers who loved Las Vegas and visited it a couple of times a year. They signed a contract to build a home in Sun City Mesquite, contingent on the sale of their home in Knoxville. It sold for $385,000 in October 2012, and four months later they moved into their new, 2,100-square-foot home with two bedrooms and two bathrooms. They paid $314,000, and they also pay about $130 a month in homeowners association fees.

“It’s like living in a resort every day, with so many activities,” says Peggy, who calls Knoxville “the allergy capital of the world.” Plus, it’s reassuring to know that if one of them is on his or her own someday, “the other person won’t be left sitting alone,” she says.

Most adult communities provide prospective buyers with the opportunity to visit for a day or stay over a weekend. For example, Sun City Mesquite recently offered a “weekend pass” with hotel accommodations for $99 per couple.

Unlike active-adult communities such as Sun City Mesquite, CCRCs provide assisted-living and skilled-nursing facilities, allowing seniors to age in place. Some also offer memory care. CCRCs are age-restricted (you generally must be at least 55 to buy in). Be sure to check whether a spouse or partner can be younger than the cut-off age.

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