Deciding to downsize - moving truck and sunshine graphicWhether it’s called downsizing or rightsizing, if you are deciding to downsize you’ll want to start by considering a few basic questions.
  • What are the main goals with selling your current home and moving to something smaller?
    • Do you want less to maintain (home, yard, both?)
    • Are the reasons primarily economic? (i.e., smaller home is less expensive to heat, cool, maintain, or cash out , or sell to get rid of the mortgage, or something else)
  • Would you prefer to stay close to where you live now, or to relocate?
  • What kind of living space would be ideal for your next home? Do you want a yard or patio? Do you want to be in a seniors community? Would you prefer more rural or more urban than what you have currently?

Deciding to downsize can be for people in many different decades of their lives


Some people drastically change their house or move somewhere smaller (or more remote / less expensive) the moment the youngest child has packed up and gone away to college. They may be in their 50s or 60s and still relatively young, working, and saving for retirement. I’ve seen people sell in Los Altos, Saratoga, and Cupertino to economically downsize to Almaden or nearby areas when they no longer wanted to pay to live in a more expensive school district.


Others keep the “family home” as long as possible. My grandparents moved many times in their lives due to my grandfather’s military career, but in their retirement years they enjoyed a large home with room for everyone to visit – and we all did. They were 90 and 92 when they moved from their 5 bedroom house at Pasatiempo in Santa Cruz to Dominican Oaks, a retirement community just a few miles from there. At their ages, more help was needed. (For my grandmother, moving to a community was wonderful socially, as she wasn’t still driving at 90.)


If you are deciding to downsize, you could be at either of these ends of the spectrum,  or you could be anywhere in between. It’s a huge gamut and there’s no “one size fits all” or one “right answer” with this topic.


What makes you consider rightsizing?


The first question to ask yourself when deciding to downsize is why you might want to sell, or why you are mulling it over. Is this something you want for yourself, or are others suggesting you’d be better off, or safer, somewhere else? Stairs can be dangerous  as we age, and while some homes can be adapted to use a chair lift, others cannot if there are too many levels. Common reasons include these:


  • safety concerns (stairs, too far from other family members, tripping hazards in the yard, the desire or need for more help with activities of daily living)
  • economic reasons (pay off mortgage & buy smaller home with cash, cash out and use the proceeds in retirement, smaller home & yard for lower ongoing maintenance costs, etc.)
  • don’t want to have to spend the time to maintain the yard, clean the house when both are large
  • desire to move closer to family – perhaps a change has happened , such as the birth of grandchildren
  • ready for a change from suburban to urban, or from suburban to rural, or some other lifestyle change
  • wanting to move to a retirement community (anything from totally independent living with no meals provided to living in a facility where meals, housekeeping, and medical help are given)


Deciding to downsize for economic reasons


It can be hard to payoff a mortgage, so if you are close to retirement but still owe a significant amount of money to a lender, you may consider selling your larger home and buying something smaller so that you have a more comfortable retirement without that ongoing expense.


If that’s the primary driver, the next question is simple: do you want to stay fairly close to where you live now , or make a bigger move to a farther away area? An option is to move from a house to a condo, townhouse, or smaller house. It’s also possible to move from a super pricey area to a less costly one. Sometimes just changing school districts can get you more house for your money – and if schools don’t matter to you, this may be a helpful option.


In Silicon Valley, many people want to stay close. I’ve had clients move to Morgan Hill and Gilroy in the South County so that they could remain nearby (and importantly, to keep their doctors). Others have gone to Santa Cruz, Livermore, and further out, particularly if they could work from home or were also retiring.


Do you want less house or less yard? Or something else?


Money isn’t always the issue for those deciding to downsize. Sometimes people want to travel and don’t want to worry about their house when doing so. In those cases, perhaps moving to a gated community, or condo building with great security, would provide peace of mind that all they need to worry about is locking the front door and going. In the process, they may opt for something smaller since they don’t plan to be home so much. But size isn’t the main focus.


Sometimes people still want a large home, but don’t want to deal with an equally big yard. Moving out of area and buying a newer home on a small lot might be just the ticket. Another option is to buy a house in a community where the yardwork is done by others. There are many neighborhoods, such as The Willows in Willow Glen, where there are single family homes on small lots but the HOA maintains the front yard. The back yards are relatively tiny and that alleviates the yardwork concern. Additionally, there are some communities of houses held in condo ownership, such as the Almaden Villas. Yardwork? Forget about it!


I’ve known relatives and friends to trade in their large suburban house on a large lot for an urban townhouse with great walkability. The new place is smaller, again with little or no outside maintenance, but the lifestyle is very different. In the San Jose area, that could mean selling the sprawling home in Los Gatos or Almaden and buying a small bungalow, townhouse, or condo in walkable Willow Glen, Campbell, Japantown, etc. (Cambrian Park will have an urban village of its own in the coming years.)


Perhaps what you’ve always wanted was a view, and now that your kids are gone, you can sell the large house and get something more modest but with a vista that you’ll love.


I’ve also known people who lived in small urban houses during their working life to move out to a rural area where they could enjoy mountain living, do small scale farming, or just relocate to a smaller community when they no longer needed to be in the “family house”.

All of these reasons are valid. What are your thoughts? You may have a mix of factors nudging you toward rightsizing or downsizing. Your choices should depend on what you really want to accomplish.


Staying put and deciding to downsize in place

It is also possible to stay right where you are and still downsize! Another option you may have is to create an accessory dwelling unit in your home and live there while renting out the house. For some people, a 2 car garage could be converted to a modest living space, leaving the living space of the house free to rent – and possibly cover your mortgage, taxes, insurance, etc. That’s a pretty drastic change, and you’d need to be willing to be the onsite manager, but it could make for affordable living space.


What it doesn’t do is leave you with space for visitors.


The state has been encouraging home owners to have accessory dwelling units (ADUs), whether attached or detached. Depending on the layout of your house or yard, it may be possible for you to build or carve out a slightly larger ADU with more than 1 bedroom in it.


Do talk with your tax professional as part of your decision making process


Whenever you do sell your house, you’ll want to factor in capital gains taxes. Please talk to a CPA or tax professional so you are not surprised with the capital gains tax bill from Uncle Sam.


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