The Downsizing Dilemma Facing Retirees

By: Anneken Tappe · October 12, 2023 · Reading Time: 2 minutes

To Downsize or Not to Downsize?

Historically, downsizing from a larger home to an apartment, or smaller home has been considered a way for empty nesters or retirees to lock in financial gains, and cut monthly expenses.

But given the state of the housing market, this decision is no longer guaranteed to result in either.

Housing Conundrum

Two major drivers keeping the cost of home ownership high are low supply and high interest rates.

America has been grappling with a housing deficit for years. High material and labor costs, which shot up during the pandemic, made matters worse. The number of homes available at an ideal size for downsizers — 750 to 1,750 square feet — has dropped some 40% since 2019. And with limited availability, come at times hefty price increases.

On top of that, interest rates have climbed over the past years as the Federal Reserve hiked its benchmark rate in its fight against high inflation, which also left its mark on mortgage rates.

Who Should Downsize?

If you have a significantly lower mortgage rate than the current average, trying to downsize might result in larger monthly payments for a smaller home. That said, mortgages can be refinanced when rates move lower again, so your payments might not stay the same forever.

It’s also important to balance the cost consideration with the other potential benefits of downsizing, such as less upkeep and maintenance requirements, or the opportunity to move closer to family and loved ones.

Read more reporting here .

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

TLS 1.2 Encrypted
Equal Housing Lender