- Homeowners in the country’s top 20 biggest metros can save about $194K from downsizing from a four-bedroom home to a two-bedroom one.
- Californians win big from downsizing: San Francisco, San Diego, and Los Angeles metro areas lead big-savers pack.
- Homeowners in Atlanta and Phoenix still gain from downsizing, though far less than those in other popular locations.
- The St. Louis metro area has the biggest difference between a 4-bedroom and a 2-bedroom home – roughly 141% – while Phoenix the smallest, 43%.
Downsizing serves homeowners in a variety of ways. Not only can people enjoy premier locations for less, but they’re also setting themselves up for a simpler, often easier living situation. A smaller home means less maintenance work and cleaning efforts, reduced utility costs and a lower carbon footprint.
Traditionally associated with empty-nesters who no longer need multi-bedroom homes, downsizing is experiencing an increase in popularity that spreads beyond the regular fanbase to other generations as well. Both Millennials and Gen X-ers tend to be more mindful about resources and how much they consume, on one hand, and more interested in freeing up money and time for experiences, on the other hand. Additionally, Americans’ increasing love for minimalism is seeing more families embrace the downsizing idea – many of us might not really be prepared for living in an actual tiny home, but we’d surely be willing to sacrifice some space in order to ease the upkeep chores and lessen the financial burden of needing to buy more domestic goods.
On top of that, residents of large urban centers have an extra incentive when it comes to downsizing – big city living is expensive, no secret there, and switching to a smaller home can help with living in the same area, without dedicating a big chunk of your income to mortgage payments.
While all these perks are generally common to downsizing everywhere across the nation, the savings part can differ a great deal depending on location. Where can homeowners enjoy the biggest savings when moving to a smaller home?
We looked at the country’s 20 most populous metropolitan areas to see where downsizing pays off the most. We based our calculations on the difference between the value of a 4-bedroom home vs. a 2-bedroom home in each metro area. We also took into account the difference in property taxes over a period of 10 years, plus selling and buying closing costs for both properties.
There may be other costs associated with downsizing but those can vary depending on personal needs and are generally less of a financial burden. Self storage for example – a service that’s frequently used when moving into a smaller home – costs roughly $127 per month on average. A standard 10×10 storage unit can easily hold the entire contents of two compact bedrooms – much lower than the residential price for the same square footage.
Downsizing Savings in the Country's Top 20 Metros
| Rank | Metropolitan Area | Downsizing Savings | 4-Bedroom Home Value | 2-Bedroom Home Value | Tax Savings* | Closing Costs** |
|---|---|---|---|---|---|---|
| 1 | San Francisco-Oakland-Berkeley, CA | $406,600 | $1,571,000 | $1,036,100 | $28,500 | $156,800 |
| 2 | San Diego-Chula Vista-Carlsbad, CA | $264,700 | $912,100 | $576,900 | $19,800 | $90,300 |
| 3 | Los Angeles-Long Beach-Anaheim, CA | $239,800 | $957,600 | $640,600 | $18,600 | $95,800 |
| 4 | Seattle-Tacoma-Bellevue, WA | $234,500 | $807,000 | $511,700 | $19,200 | $79,900 |
| 5 | Miami-Fort Lauderdale-Pompano Beach, FL | $233,700 | $506,800 | $247,200 | $22,000 | $48,000 |
| 6 | Boston-Cambridge-Newton, MA-NH | $232,900 | $734,300 | $455,600 | $26,600 | $72,400 |
| 7 | New York-Newark-Jersey City, NY-NJ-PA | $215,400 | $614,900 | $376,800 | $37,800 | $60,500 |
| 8 | Detroit-Warren-Dearborn, MI | $209,800 | $372,600 | $158,200 | $29,900 | $34,600 |
| 9 | Washington-Arlington-Alexandria, DC-VA-MD-WV | $209,600 | $624,100 | $374,400 | $21,000 | $61,200 |
| 10 | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | $194,000 | $444,600 | $239,400 | $31,500 | $42,800 |
| 11 | St. Louis, MO-IL | $189,900 | $338,300 | $140,300 | $23,200 | $31,300 |
| 12 | Dallas-Fort Worth-Arlington, TX | $189,300 | $398,600 | $200,900 | $29,500 | $37,900 |
| 13 | Riverside-San Bernardino-Ontario, CA | $189,100 | $562,600 | $334,200 | $15,700 | $55,000 |
| 14 | Chicago-Naperville-Elgin, IL-IN-WI | $158,900 | $366,000 | $204,700 | $33,000 | $35,400 |
| 15 | Denver-Aurora-Lakewood, CO | $158,500 | $629,600 | $416,700 | $8,500 | $62,900 |
| 16 | Tampa-St. Petersburg-Clearwater, FL | $145,600 | $380,600 | $210,000 | $11,800 | $36,700 |
| 17 | Houston-The Woodlands-Sugar Land, TX | $133,000 | $305,600 | $167,200 | $24,000 | $29,500 |
| 18 | Minneapolis-St. Paul-Bloomington, MN-WI | $121,600 | $406,500 | $258,000 | $13,300 | $40,300 |
| 19 | Atlanta-Sandy Springs-Alpharetta, GA | $107,800 | $350,600 | $218,000 | $9,900 | $34,600 |
| 20 | Phoenix-Mesa-Chandler, AZ | $93,200 | $440,300 | $308,200 | $5,600 | $44,500 |
**Buying and selling closing costs
Source: STORAGECafe analysis of Zillow and U.S. Census Bureau data
Homeowners in the Bay Area can save ~$400K by downsizing from a 4-bedroom to a 2-bedroom home
The San Francisco-Oakland-Berkeley metro remains one of the most engaging, beautiful, and expensive places to live in the U.S. – a mix that makes those fond of the Bay Area constantly explore and adjust housing expectations to be able to live comfortably. Downsizing provides a good option to enjoy the area without paying an arm and a leg on housing.
The value of a 4-bedroom in the San Francisco metro stands at almost $1.6 million, while a 2-bedroom home stands at around $1M, resulting in a difference of about $530,000. The property tax difference between the two types of home totals over $28,000 for a 10-year period. After factoring in the closing costs, homeowners willing to downsize end up with over $400,000 in savings – the most among the 20 biggest metros. In the case of the city of San Francisco proper, savings are even greater: homeowners trading a 4-bedroom home for a 2-bedroom one can save no less than $535K per move.
Furthermore, when looking at the three major cities in the San Francisco metro area and at how much downsizing homeowners can save by moving from one to the other, the figures tell a much more nuanced story.
- Downsizing from the city of San Francisco to Oakland results in almost $1.2M in savings
The most advantageous downsizing move is from a 4-bedroom home in San Francisco to a 2-bedroom in Oakland, a move that can get you almost $1.2 M in savings. Swapping San Francisco for Berkeley and, at the same time, downsizing from a 4-bedroom home to a 2-bedroom one is a move that could potentially save almost $670,000.
When moving from a 4-bedroom home in Berkeley to a 2-bedroom one in San Francisco, homeowners can save somewhere around $530K.
San Diego homeowners can pocket over $260K from downsizing
San Diego-Chula Vista-Carlsbad has never been particularly easy on the wallet and downsizing here can provide some financial respite. Residents switching from a 4-bedroom home to a 2-bedroom abode in the metro area can save over $260K overall. Homeowners that are planning to downsize, but don’t want to leave the center of the metro’s action can still enjoy about $315K in savings by relocating within the city limits of San Diego, from a 4-bedroom home to 2-bedroom one.
In terms of city-to-city downsizing between the metro area’s major cities, Carlsbad to Chula Vista brings in the biggest savings, of almost $760,000. The smallest amount of savings results from downsizing from a 4-bedroom home in San Diego to a 2-bedroom one in Carlsbad – about $250,000.
The Los Angeles metro ranks third, winning the downsizing savings podium for California
Another Californian hotspot, the Los Angeles-Long Beach-Anaheim metro area, ranks third in terms of downsizing savings. The value of a 4-bedroom home stands at almost $960K, while a 2-bedroom one sells for around $640,000 – a difference of nearly $314K. The property tax savings over a 10-year period amount to a substantial $19,000. After factoring in closing costs, the savings from downsizing in the Los Angeles metro area end up at $240,000 on average.
Looking at potential savings when downsizing in LA proper, moving from a 4-bedroom home to a 2-bedroom in the city can save homeowners about $200K.
Angelenos who seek an even better deal can choose to relocate to a smaller home in either Anaheim or Long Beach. Downsizing from a 4-bedroom home in LA to a 2-bedroom in Anaheim saves the potential mover over $420K.
Moving to a smaller home in Anaheim, even as a young family with children, can be feasible, and even fun, considering the many attractions in the city that cater primarily to families, such as Disneyland, the Disney California Adventure Park, and the Aquarium of the Pacific among other equally fun yet lesser-known venues. Huntington Beach is always a good spot for spending some time outdoors while the Anaheim Packing District is chock full of cozy restaurants and cafes. Even better, while consumer prices in the two cities are relatively close, restaurant prices in Anaheim are 24% cheaper than in LA.
Engaging in the same type of move but from Los Angeles to Long Beach results in slightly smaller, but still very significant downsizing savings of almost $356K. Granted, exchanging a city of almost 4 million people for another with about 470,000 residents implies a huge lifestyle change – however, it can be the right move for empty nesters, retirees or simply people who crave more peace and quiet in their lives.
Downsizing in Seattle and Miami metros brings savings of around $230K
Seattle-Tacoma-Bellevue ranks fourth among the country’s largest metros in terms of potential downsizing savings. After accounting for property tax differences and closing costs, the savings from downsizing in the Seattle metro area stands at roughly $235K.
Downsizing from a 4-bedroom home in Bellevue to a 2-bedroom one in Tacoma brings the biggest savings in terms of city-to-city moving, at almost $1 million. Leaving Bellevue for a smaller home in Seattle results in savings of almost $600,000. Seattle to Tacoma downsize generates savings of almost $675K, while Seattle to Bellevue downsizing moves can result in over $400K in savings. Choosing to stay put in the city of Seattle, but in a smaller home, will get homeowners about 290K in savings.
Miami-Fort Lauderdale-Pompano Beach ranks fifth for downsizing savings. Total savings calculated for a 10-year period stand at around $233,000, with the value of a 4-bedroom home exceeding $500,000 and a 2-bedroom one costing almost $250,000 in the Miami metro area. Considering the city of Miami alone, the potential savings for downsizing hover around $160,000, while downsizing within Fort Lauderdale is a lot more profitable, resulting in almost $364K in savings.
Regarding downsizing savings when moving between the metro area’s major cities, the most profitable route is from a 4-bedroom home in Miami to a 2-bedroom one in Pompano Beach – this move can get homeowners almost $290K in savings. Downsizing from Miami to Fort Lauderdale comes with an attached discount of over $150,000.
Newton to Boston is the most profitable downsize in the Boston metro area
The Boston-Cambridge-Newton metro area ranks sixth for downsizing savings among the country’s top 20 biggest metros. The value for 2-bedroom homes in the metro area is $455,000, compared to over $730,000 for 4-bedroom homes – in other words, there’s only a 40% difference between the two types of homes. This results in downsizing savings of $233K across the metro area as a whole.
However, numbers are quite different for residents downsizing between the metro area’s main cities. Homeowners who are downsizing from a 4-bedroom home in Newton to a 2-bedroom one in Boston are gaining an impressive $690,000. Those who prefer to downsize from Newton to another smaller city can choose Cambridge and walk away from the deal with savings amounting to $500,000.
However, there are downsizing routes within the Boston metro area that result in extra spending rather than savings. Due to the higher price of homes in both Newton and Cambridge compared to the city of Boston, Bostonians who are keen to downsize to Cambridge have to spend an extra $184K to achieve their goal, while the ones interested in Newton must pay about $50,000 to relocate to a smaller home here.
New York-Newark-Jersey City ranks seventh among the country’s biggest metros for downsizing savings
Downsizing from a 4-bedroom to a 2-bedroom home in the New York-Newark-Jersey City metro area results in overall savings of roughly $215K for homeowners. The home value for a 4-bedroom stands at $615,000 in the metro area, while for a 2-bedroom home is around $380K.
Naturally, when downsizing between the three main cities of the metro area, the amount of savings varies significantly. Downsizing from a 4-bedroom home in New York City (with all its boroughs considered) to a 2-bedroom one in Newark will get homeowners savings of over $500K. Relocating from NYC to a smaller home in Jersey City results in savings of over $170K.
However, as many New Yorkers are less likely to be willing to leave the thrill of Manhattan living for outer boroughs or smaller cities like Newark or Jersey City, we wanted to see what the options are for those who want a more relaxed, budget-friendly lifestyle in a smaller home while still keeping a Manhattan address.
The value of a four-bedroom home in ZIP Code 10013, covering parts of the Tribeca and Soho neighborhoods, Manhattan’s most exclusive (read: expensive) area, now stands at over $6.4 million, a hefty price tag even by NYC standards. Naturally, downsizing from 10013 is bound to bring in some serious savings if you’re willing to live smaller. Switching from a 4-bed home to a 2-bed home in the same area will give you an excess of $3.2 million, following acquisition expenses. Moreover, if you’re comfortable with leaving Tribeca for other popular Manhattan neighborhoods, you can make even more savings.
Take 10002 in Lower East Side, a sought-after NYC neighborhood. It has generated almost $690M in home sales over the last three years, making it stand out as one of the most popular areas for Manhattan home purchases, according to data from PropertyShark. Relocating from a 4-bed home in Tribeca to a cozier, 2-bedroom home in Lower East Side will likely put more almost $4.9 million into your pockets.
Detroit and DC metros' downsizing hover around $210,000
The Detroit-Warren-Dearborn metro area features overall downsizing savings of roughly $210,000, based on a value for a 4-bedroom homes at $370,000 and of $160,000 for a 2-bedroom home. When downsizing within the city limit of Detroit, homeowners generate significantly less in savings – about $30,000.
However, Detroit is a special case – not only that downsizing doesn’t lead to savings in some scenarios, but it can attract extra expenses. Relocating from a 4-bedroom home in Detroit to a 2-bedroom one in Dearborn results in extra expenses of almost $78,000. At the same time, leaving the city of Detroit for a smaller home in Warren results in homeowners having to spend almost $22,000.
The Washington-Arlington-Alexandria metro area overall promises savings of almost $210,000 to residents downsizing from a 4-bedroom home to a 2-bedroom one. Downsizing within the capital city brings in savings of almost $300,000. When looking at the major cities of the metro area, the most advantageous city-to-city downsizing move within the metro area is from a 4-bedroom home in Arlington, VA to a 2-bedroom one in Alexandria – homeowners taking that route will save almost $610,000. The least amount of savings comes from downsizing from Washington, DC to Arlington – about $325,000, so it’s still a significant sum of money.
Philadelphia-Camden-Wilmington closes out the first half of the downsizing savings ranking, with about $194,000 when moving from a 4-bedroom home to a 2-bedroom one in the metro area overall. The home value for a 4-bedroom stands at $445,000, while a 2-bedroom is around $240,000, resulting in a significant amount of savings. City-to-city, the most financially impactful downsizing decision is from a 4-bedroom home in Wilmington to a 2-bedroom one in Camden, a move that results in about $300,000 in savings.
The St. Louis, Dallas, and Riverside metros all see downsizing savings of almost $190,000
The Greater St. Louis metro area ranks eleventh among the country’s largest metros in terms of potential downsizing savings. The value of a 4-bedroom home in the area stands at almost $340,000, while a 2-bedroom is $140,000. This makes Greater St. Louis the metro area with the biggest gap between a 4-bedroom and a 2-bedroom home, of 141%. After accounting for differences in property taxes and closing costs, this results in savings of almost $190,000 for homeowners.
The city of St. Louis has a far smaller difference between four-bedroom and two-bedroom homes, of only 58%, resulting in downsizing savings within city limits of about $95,000. Downsizing from St. Louis to the next largest in terms of population, which is O’Fallon, comes with savings of about $51,000. Trading O’Fallon for a smaller home in St. Louis, on the other hand, brings savings of almost $193,000 to homeowners.
Downsizing within the Dallas-Fort Worth-Arlington metro area will bring homeowners savings of about $190,000, based on a 4-bedroom home value of almost $400,000 and that of a 2-bedroom home of around 201,000. Residents of the city of Dallas are gaining more if they decide to downsize to Arlington – about $354,000 – compared to downsizing to Fort Worth, which brings in around $348,000 in savings.
Californian metro Riverside-San Bernardino-Ontario ranks 13th for downsizing savings. The home value for a 4-bedroom in the area stands at over $563,000, while a 2-bedroom home at $330,000. After accounting for all the other expenses and savings associated with downsizing, the overall return is around $189,000. Moving from a 4-bedroom home in Riverside to a 2-bedroom one in San Bernardino rakes in about $252,000, while downsizing from the same Riverside to Ontario brings in about $127,000 in savings.
Chicago and Denver metros both offer savings of just under $160,000
The Chicago-Naperville-Elgin metro ranks 14th among the country’s largest metros in terms of potential downsizing savings. The value of a 4-bedroom home in the metro stands at $366,000, while a 2-bedroom one costs a little over $200,000. The difference between these two types of properties, plus the other savings (and expenses) involved in downsizing result in a final saving of just under $160,000.
Downsizing between the main cities of the metro area will generate different results. The most advantageous route, financially speaking, is from a 4-bedroom home in Naperville to a 2-berdoom home in Elgin, a move that brings homeowners savings of over $330,000. Downsizing from Naperville to Chicago, on the other hand, will result in savings of $250,000. Homeowners who want to leave a big home in the Windy City for smaller ones in the more tranquil Elgin or Naperville will save, respectively, around $128,000 or $100,000.
The home value for a 4-bedroom in the Denver-Aurora-Lakewood metro area is around $630,000, while a 2-bedroom one costs a little under $420,000, resulting in savings of around $159,000. However, when looking at downsizing city-to-city between the metro’s main cities, there’s potential for higher savings. Downsizing from a 4-bedroom home in the city of Denver to a 2-bedroom one in Aurora gets homeowners over $330,000 in savings, while relocating to a smaller home in Lakewood can save more than $310,000.
Tampa and Houston metros warrant lower savings compared to their counterparts, Miami and Dallas
Downsizing within the Tampa-St. Petersburg-Clearwater metro area results in savings of almost $146,000 for homeowners – compared to almost $234,000 in Miami’s case. Those relocating from a 4-bedroom home in the city of Tampa to a 2-bedroom one in Clearwater can save significantly more money – over $210,000. Leaving Tampa for St. Petersburg, and downsizing at the same time, will result in more modest savings amounting to $180,000.
Texas is generally more affordable than every other big state in the nation and consequently savings are not on the hefty side. However, moving to a smaller home in the Houston-The Woodlands-Sugar Land metro area saves homeowners about $133,000 overall. The most profitable move is from a 4-bedroom home in The Woodlands to a 2-bedroom one in Houston – over $310,000.
Homeowners leaving Houston for a smaller home in the more exclusive The Woodlands will end up with just $10,000 in savings, while those relocating to Sugar Land are gaining almost $40,000 in savings.
Minneapolis, Atlanta, and Phoenix provide the smallest downsizing savings among the country’s top 20 biggest metros
The Minneapolis-St. Paul-Bloomington metro area features a home value of over $400,000 for 4-bedroom homes, while 2-bedroom ones are around $260,000. Based on these values, savings associated with downsizing within the metro area overall are a little over $120,000.
Downsizing from a 4-bedroom home in Minneapolis to a 2-bedroom one on St. Paul gets homeowners about $145,000 in savings, while doing the same type of relocation to Bloomington results in $130,000 in savings.
The Atlanta-Sandy Springs-Alpharetta metro area offers the second lowest amount of savings from downsizing among the country’s major metros. The combination of lower housing costs compared to most of the other metros leads to downsizing savings of almost $110,000 in the metro area overall.
However, homeowners currently residing in the city of Atlanta can save a lot more than that if they pick Sandy Springs as their new home. Downsizing from a 4-bedroom home in Atlanta to a 2-bedroom one in Sandy Springs can save over $280,000. Downsizing within the city of Atlanta itself gets homeowners over $163,000 in savings.
The Phoenix-Mesa-Chandler metro area has the smallest difference between a 4-bedroom and a 2-bedroom home out of all the metros analyzed – just 43%, so the savings from downsizing are, naturally, less eye-popping. The metro has a value of $440,000 for 4-bedroom homes, and a value of almost $220,000 for 2-bedroom homes, resulting in downsizing savings of around $93,000 for the metro area overall. Homeowners choosing to downsize from the city of Phoenix to Mesa will save $118,000 while those relocating to a smaller home in Chandler can put aside over $47,000. The highest amount of savings is registered when downsizing from a 4-bedroom home in Chandler to a 2-bedroom one in Mesa – almost $210,000.
Downsizing remains a good option for a large pool of homeowners who seek more financial liquidity, irrespective of the location they’re in. Add the purchase savings to a series of other perks, including less upkeep and a more sustainable spending routine and the move to a smaller home can become a solution to many housing concerns.
What the experts are saying
Morris Davis, Ph.D., Professor and Paul V. Profeta Chair in Real Estate, Rutgers University Business School
Do you consider downsizing a good money-saving strategy for residents of big metros?
Potentially. Money saved from downsizing can come from (a) lower property taxes, (b) lower depreciation/maintenance expenditures, and (c) lower interest expenses on a mortgage (or, lower opportunity costs of holding funds in home equity).
Read more....The average property tax rate is about 1%, the average mortgage rate on new mortgages is about 3%, and the average depreciation rate is about 2%. So, on average, every $100,000 reduction in house price is associated with a savings of interest (or opportunity cost), taxes and depreciation of about $6,000 per year - although obviously this can and does vary a lot.
There is a large cost to downsizing from realtor fees and taxes of all sorts. There is some variation, but let's say these fees and taxes are about 8% on the value of the property. So, if you see a $1,000,000 home, you would pay $80,000 in fees and taxes. Moving from a $1,000,000 home to an $800,000 home - a 20% reduction, which is not small - saves about $12,000 per year in interest, taxes and depreciation on average but costs about $80,000 in fees and taxes. The payback period for that move is 6.7 years.
Is downsizing becoming more popular or less popular in the United States, in your opinion, and why?
Downsizing wasn't ever popular (defined, broadly, as something most people want to do). There is a longstanding question as to why more older people do not move out of their homes once they retire, or once the kids move out etc. I think the answer is simple: people like their homes and do not like change.
What are the main reasons homeowners might choose to downsize, and what categories of big city homeowners are the most interested in downsizing?
Just to be clear, moving (relatively) far away isn't downsizing in my opinion. Downsizing means staying in the same area and occupying less space. Moving far away - for example, from the city to the suburbs, or from California to Idaho - is just that. Some people just want more space for less money, and that's why they move from the city to the suburbs or from California to Idaho.
So, focusing on downsizing, people downsize when they don't want (or cannot afford) to care for a large space. A lot of times, the property taxes are too burdensome in retirement. This is why voters in California passed a law limiting year-to-year increases in property taxes.
Yaidi Cancel Martinez, Ph.D., Adjunct Professor, University of Wisconsin-Milwaukee, School of Architecture & Urban Planning
What are the main reasons homeowners might choose to downsize, and what categories of big city homeowners are the most interested in downsizing?
The reasons homeowners might choose to downsize might be a matter of choice, necessity, or both. It is important to be aware of potentially influential factors such as age, income, housing costs, household size, and market pressures.
Read more....For example, homeowners might choose to downsize to a smaller home or move elsewhere if their household size decreased (adult children moving out for work, college or other opportunities). They may choose to move after retirement or in other life-changing situations such as a change in a relationship. Or they may downsize out of necessity because of rising housing costs, losing a job, shrinking or stagnant income, or market pressures. It depends on the situation, influential factors and place.
Job Hammond, MBA, MSM, Adjunct Professor of Real Estate & Finance, Austin Community College
Do you consider downsizing a good money-saving strategy for residents of big metros?
Housing is typically the most significant expense that residents in metro areas face. The space needs of homeowners will dictate the type and location of the house that suits their lifestyle.
Read more....Those with significant life changes, such as kids going off to college, will be in a position to consider downsizing their space to reduce housing and maintenance expenses.
Is downsizing becoming more popular or less popular in the United States, in your opinion, and why?
There was a recent movement towards downsizing and living in smaller spaces convenient to shopping, lifestyle, and amenities. After experiencing the global pandemic of COVID-19, individuals are now seeking larger living environments further away from the cities that have home offices, media rooms, and home gyms that accommodate a work-from-home environment. Multi-generational living has increased for families who seek shared expense living.
What are the main reasons homeowners might choose to downsize, and what categories of big city homeowners are the most interested in downsizing?
According to CoreLogic, the average homeowner increased their house equity by an average of $26,300 in 2020. Home equity has created a buffer that can allow homeowners to pay off debt, send the kids to college, downsize their housing, and eliminate the need for a mortgage. Downsizing is not common within any generation; however, there has been an increase in multi-generational living where larger houses are needed to support the space needs of adult children and older parents.
Lance Shoemaker, Business and Real Estate Instructor, Co-Department Chair, West Valley College
Do you consider downsizing a good money-saving strategy for residents of big metros?
I think the answer depends upon how secure the person is in their housing and whether it's owned or rented.
Read more....For example, if they live in a jurisdiction with rent control then they probably don't need to downsize since they already have some predictability with their rent. Similarly, if they live in a home where they are quite comfortable paying the mortgage, there's probably not a need to downsize. But that's not to say people don't need to downsize. Many of us end up paying way more than we need to for space that we don't need at all.
Downsizing in general only seems to be seriously considered by people who are empty-nesters and/or retiring. But it can make sense for lots of people to get rid of stuff, particular the stuff they keep with them in their living units.
Is downsizing becoming more popular or less popular in the United States, in your opinion, and why?
I think that's too soon to tell. No one really knows the long-term effects of pandemics on the residential and commercial real estate market. If anything, it seems like there is an outflow of people from major metropolitan areas into smaller suburban and rural areas because it's so much easier than it used to be to work from home. And housing is cheaper per square foot in the areas people are moving to.
What are the main reasons homeowners might choose to downsize, and what categories of big city homeowners are the most interested in downsizing?
In recent years there has been this move to simplify things, organize, cleanout, etc. So I think there is renewed interest in making your life simple and getting rid of possessions to some extent. In terms of categories of big city homeowners, as noted above I think empty-nesters and retirees are the most likely to consider downsizing.
Methodology
This analysis was done by StorageCafe, an online platform that provides storage unit listings across the nation.
We looked at the country’s top 20 largest metropolitan areas by population and ranked them based on potential downsizing savings resulting from moving from a 4-bedroom home to a 2-bedroom home.
For this research we used Zillow Home Value Index, a smoothed, seasonally adjusted measure of the typical home value and market changes across a given region and housing type.
We calculated the home value difference between a 4-bedroom home and a 2-bedroom home for the 20 metropolitan areas, at metro, city, and ZIP Code level.
The median taxes for 4-bedroom homes are calculated by multiplying the median taxes across all properties by the ratio of 4-bedroom home values to all home values.
The median taxes for 2-bedroom homes are calculated by multiplying the median taxes across all properties by the ratio of 2-bedroom home values to all home values.
Tax savings per 10 years were calculated as the difference between median taxes for a 4-bedroom home minus median taxes for a 2-bedroom home, multiplied by 10.
Closing costs were calculated as 8% of the average home value for a 4-bedroom home (selling costs) and 3% of the average home value for a 2-bedroom home (buying costs).
Downsizing savings represent the home value difference between a 4-bedroom home and a 2-bedroom home plus tax savings per 10 years, minus the closing costs.
Fair Use and Distribution
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