For Retirees, Downsizing to a Smaller Home Isn’t the Cash Grab It Once Was
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When Linda and Gary Hansen downsized in 2014, they made out pretty well. They sold their 3,300-square-foot St. Louis home for $325,000; trading down for a 1,900-square-foot house in Largo, Florida — and banking about $40,000 in the process. They paid in cash, so there was no new mortgage payment to worry about, and got to achieve their dream of retiring by the beach. (Their house is a mere two miles from the coast).
“I never wanted to be cold or see snow again,” Linda says. “I tell people that the only thing I want to see that is white on the ground is white sand.”
But that was eight years ago. Now, their Largo home — which they paid $288,000 for — is worth more than double that. And their goal of downsizing by the beach? Linda says that wouldn’t be possible with today’s inflated prices.
“Now with the insanity of Covid, our home would be worth around $625,000,” she says. “We would not be in a position to buy it now.”
With home prices up a jaw-dropping 19% in just the last year, downsizing isn’t as affordable — or profitable — as it once was. Which begs the question: Is there still financial gain in selling big and buying small?
It’s possible, experts say, but today’s market might pose some challenges. Are you considering cashing in on your home’s equity and buying down? Here’s what to think about before you do.
High home prices
