The Finance Blogger


Should we Downsize?

Should we DownsizeWell this is a subject that many people who are about to retire or have just retired think a lot about. The kids are gone. You are tired of the big house, the cost of maintenance and upkeep, not to mention the cleaning and all the other stuff.  The answer many people immediately think about is that they will down size to a smaller home, their cost will be less, they will save money and life will be great. Should we downsize to save money or stay in our current home?

It turns out that this is not always the case and it really depends on where you live and what your real motivations are for down sizing. This is something we have been giving a lot of thought to recently and we have just about concluded that the smart thing is to stay right were we are complete with the big house, the pool and the big yard. Now before you say they are crazy, read the rest of this post and then tell me what is wrong with our logic. We are trying to avoid the emotional side of the decision, since once emotions get involved you never know were things will end up.

Should we Downsize – Our Situation re Downsizing

Anyway here is our situation. We would like to move to a nice condo were we really do not have to worry about anything, just pay the condo fee’s and pay for utilities and any decorating that we may have inside our unit. Well it turns out, at least in the area that we live in, the condo fees for a nice condo are really high, in access of $500 a month. Taxes are also the same as what we pay for our current home. So we are not going to save anything really from an operating cost perspective. This is really a critical point in the cash flow part of the analysis.

When it comes to price for something nice were we live, the price for a 2 bedroom apartment style condo is near what our home is worth. By the time you pay for legal fees, real estate fees and decorating, I will have to take out a mortgage on the new place and be further in debt. We have concluded for these reasons that it is cheaper to stay just were we are and pay for people to clean snow off the driveway and do other odd jobs that are needed from time to time.

Sure we have the responsibility of maintaining our home, but with the current economics in our area, it just does not make sense to move and downsize right now. Even bungalows are more expensive than our current home of 4 bedrooms. Now we have to mention that prices are certainly not the same in every area. They vary a great deal and the costs for condo fees also vary a great deal so your answer might be different than mine, which is ok. You need to do your own analysis and make your own decisions. All we are saying is that it makes no sense for us at the present time to downsize and move.

Should we Downsize – One last comment.

We also really like our home and do not want to or need to move or downsize. There is no pressure to move or change homes. This makes our decision even harder from an emotional perspective. We want to stay, but also want something with a lower cost. These decisions are not compatible with each other.

The upshot of all of this talk is that we plan to stay right were we are. For those of you considering the big decision to down size or not, you really should compare the following costs:

  • Cost of new place vs. what you can sell yours for
  • Moving costs including real estate and legal fee’s
  • Decoration costs of the new place
  • Taxes at the new place vs. your current home
  • Utility costs at the new place vs. your current home
  • Maintenance costs for your current home
  • Condo fees at your new home if moving into a condo
  • Maintenance fees for your new home
  • Upgrade costs such builder upgrade costs
  • Landscaping costs, fencing etc if applicable

By the time you compare all of these things, it is just cheaper to stay right were you are!

Comments and thoughts are welcome about things we did not think about or include. For more information about the question, should we downsize our home, click here.

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One Response to “Should we Downsize?”

  1. everyone I talk to is having the same problem trying to figure out what they should do and when they should downsize. We cannot make up our minds at all. We love the street we are on and we love the house, so I guess we are here to stay

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