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.
By: Job Hammond, MBA, MSM, Adjunct Professor of Real Estate & Finance, Austin Community College
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.
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.