I posed this question a few months ago: Should our growing family be downsizing? In that article I listed a lot of the good things that downsizing your home can provide. It’s true, there is often some money-saving goodness to be had in downsizing.
But, there are also a lot of negatives. I really appreciated your comments at the bottom of that article. They were incredibly helpful in helping me think through this. And at this point in time we’ve decided that getting a BIGGER home is actually better for us. After my list of downsizing cons I’ll tell you why upgrading to a bigger house is actually a better move for us at this point in time.
The Cons of Downsizing Your Home
Living in a condo. I never was a fan of apartment living and condo living has a lot of similarities. I am 100% extroverted and love hanging out with people, but I also like easy access to my own space. So, being in close quarters at all times, with a little baby, (who might or might not tend to cry) is certainly cause for concern. I’m just not sure that I’m cut out for condo life.
Storage space. We’re trying to live a little more minimalistically in the Larsgaard household. We’ve hauled off bags of clothes and unused household items to some local organizations that serve the needy. We even took part in a yard sale with friends. We hope to continue to pare down our possessions (or at least stay even) but we still have too much stuff to shoehorn ourselves into 736 square feet. And if you don’t know how I feel about storage units…they’re a waste of money.
Zero yard. Right now we’ve got a nice little backyard. And we like it. The back deck and yard serve as another living space for us during the spring, summer, and fall. They make our house feel bigger than it actually is. Although the lack of lawn maintenance would be pretty awesome I’m sure we would really miss that space. Because of the yard it would feel like losing a lot more than just 500 square feet.
Future growth. Downsizing to 736 square feet certainly isn’t impossible. I’m sure we could “make it work.” However, what about future growth? We want more kids someday. And that condo just wouldn’t house many (if any) more. And that’s a problem, especially with the transaction costs that go into purchasing real estate.
Wanting more rental properties. If we moved into a condo and rented out our current home we would add to our rental property holdings in the short-term. But since it is incredibly hard to rent out a condo – and since future growth plans would make it a move that wouldn’t last long – it might not be as judicious of a decision.
Moving sucks. Especially if you don’t love the space you’ll be moving into. Sure the move made some financial sense, but the lack of real world sense made us dread the thought of transitioning from a home we love (that isn’t overly large) into a condo that we wouldn’t love. And the savings just were not enough to justify how awful moving is.
So here’s where our little Larsgaard clan stands now. We are actually under contract on a bigger house. Before you start calling me out on my wishy washy standards let me tell you why. I promise, it actually makes good family and financial sense.
The new house we are purchasing is a total of 2,000 square feet. But a large chunk of that space is dedicated to a 1/1 that makes for a perfect rental. For the foreseeable future we’ll be renting that out as well as the house that we are currently in. This allows us not to just double our rental property holdings, but to triple them in one fell swoop!
We also like this house a lot more. The location. The walkability (using our cars less). And the way it’s set up, when we eventually want more space we can lose the renter and take over the full house – without an expensive addition.
Real Estate Transaction Costs are No Joke
And here’s another big reason for buying something bigger. Real estate transaction costs are huge! There are agents fees and closing costs to deal with. Then there are title, inspection, and escrow costs…you get the drill. Buying and selling homes often isn’t a recipe for financial success. Buying and holding – that’s the ticket. So buying this house now and thinking towards the future is where we’re at. We’ll have that yard plus room for growth. We’ll be in the location we want to be in long term (even though it’s not far from where we currently live).
This new house seems to hit pretty much everything on our wish list. And the financials actually work out better in the short term and the long term. Downsizing our home isn’t in our future. And it’s not a bad idea for a lot of Americans who are in homes that are far too big for them. But for us, it just didn’t make sense right now.
Anyone else out there downsized and have a story to tell? What do you think the cons are of downsizing your home? Or maybe you’ve gone the opposite direction like me and still done well? I would love to hear about it in the comments section below!
4 Comment responses
Great article! Love that you’re moving somewhere walkable. Driving less alone will make you rich over time and your health will be much better!
With a growing family, I would’ve gone up a size too. I can’t imagine living in a condo with little kids, one reason I know I’d leave NYC when I want to start procreating. I need some space!
Hi Joel, this post is a couple years old but since I just came across it I’ll chime in anyways. You make a lot of good points here – transaction costs and quality of life are both extremely important considerations.
I think as long as the pros of upgrading are weighed against the a carefully considered budget, everything you say here makes sense. On the other hand, all of this gets thrown out the window if whoever is doing this calculation underestimates the costs of owning a bigger home. Sounds like you’ve run the numbers though!
Thanks for sharing, very useful infomation. I agree that downsizing is a very unpleasant process, but sometimes it’s just necessary. It doesn’t always mean it’s forever, but it’s something which has to be done. I don’t know what I would do without any outdoor space of my own – I would probably go crazy.