Is Downsizing Your Home Worth It?

Reducing staff may still be a good idea if done right. Not only will you be leaving with more money, but it may also simplify your life and reduce the maintenance of your home. To achieve that happy outcome, you must avoid the unexpected difficulties that make downsizing so risky. Unless you have the money to buy your new home directly, the reduction in staff may not be worth it financially.

Mortgage rates have risen by more than 2.5 percentage points since the beginning of the year, and financing a home purchase is now significantly more expensive than it was a few months ago. In many cases, less is more: Think about the trend of small homes and the general popularity of downsizing. The most common reasons for downsizing are to save money and eliminate unused space. Downsizing your home may be the right decision at any stage of life, depending on your goals.

You might find that buying a smaller home makes more sense once it becomes an empty nest, or maybe you're a member of the millennial generation who wants more money to retire early or travel. Some always intend to reduce their size, but may be surprised by the amount of things they have accumulated over the years in their homes. Or you may decide to downsize before then so you can spend less on housing and spend more money on other goals, such as retirement or travel. It's worth remembering that potential buyers of your current home and sellers of the next one think the same way.

Plus, you'll generally spend less to heat and cool a smaller home, so if you've had to deal with sky-high utility bills, downsizing could help you reduce them. You can downsize at any time, but it's worth doing some research on where you want to live, what type of property you'd be satisfied with, and being realistic about how much you own. Still, it's worth doing some simple arrangements, such as fresh paint here and there, pruning overgrown shrubs, and clearing your house from top to bottom. People who are going through a divorce may no longer need a large home without a full-time family and may find it cheaper to downsize to a more affordable home.

If you can't remember the last time you entered your guest room except when it was full of dust, you should consider reducing its size. There's no real need to downsize if you're opposed to the idea, but it can often offer a better quality of life with the money you earn from selling. The typical house that was hired in March was only 1,720 square feet, according to a report by the real estate agency Redfin, condos and townhomes, other important options for downsizers, are also becoming more popular. Reducing staff can certainly bring emotional and personal benefits, but with current economic and housing conditions, financial benefits are harder to come by.

Robert Elson, a real estate agent at Coldwell Banker Warburg, recommends estimating all of these costs in advance long before deciding to downsize.