Downsizing and Real Estate

1/4/2024 | By Sandra Block

For many retirees, downsizing makes sense, both financially and practically. The current real estate market complicates the process, but it also provides advantages.

A smaller house or condo typically requires less maintenance and may be more accessible than a two-story suburban house. And at a time when homeowners age 62 and older have more than $12 trillion in home equity, downsizing makes sense – it offers a way to free up some of that equity for other purposes, such as shoring up retirement accounts or saving for long-term care.

For retirees Fred and Shelby Bivins, selling their home in Green Valley, Arizona, will enable them to realize their dream of traveling in retirement. The Bivinses have put their 2,050-square-foot Arizona home on the market and plan to relocate to their 1,600-square-foot summer condo in Fish Creek, Wisconsin, a small community about 50 miles from Green Bay. They plan to live in Wisconsin in the spring and summer and spend the winter months in a short-term rental in Arizona, where they have family.

With help from Chris Troseth, a certified financial planner based in Plano, Texas, the Bivinses plan to invest the proceeds from the sale of their home in a low-risk portfolio. Once they’re done traveling and are ready to settle down, they intend to use that money to buy a smaller home in Arizona.

A downsizing couple looking at a new home with a realtor.

“Selling their primary home will generate significant funds that can be reinvested to support their lifestyle now and in the future,” Troseth says. “Downsizing for this couple will be a positive on all fronts.”

For all its appeal, downsizing in today’s market is more complicated than it was in the past. With recent 30-year fixed interest rates on mortgages above 7%, many younger homeowners who might otherwise upgrade to a larger home are unwilling to sell, particularly if it means giving up a mortgage with a fixed rate of 3% or less. As a result, buyers are competing for limited stock of smaller homes, says Hannah Jones, senior economic research analyst for

Downsizing makes sense, and retirees have an edge

Here, though, many retirees have an advantage, Jones says. Rising rates have priced many younger buyers out of the market and made it more difficult for others to obtain approval for a loan. That’s not an issue for retirees who can use proceeds from the sale of their primary home to make an all-cash offer, which is often more attractive to sellers.

Retirees also have the ability to cast a wider net than younger buyers, whose choice of homes is often dictated by their jobs or a desire to live in a well-rated school district. While the U.S. median home price has soared more than 40% since the beginning of the pandemic, prices have risen more slowly in parts of the Northeast and Midwest, Jones says.

“We have seen the popularity of Midwest markets grow over the last few months because out of all of the regions, the Midwest tends to be the most affordable,” she says. “You can still find affordable homes in areas that offer a lot of amenities.”

Sandra Block is a senior editor at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit

©2023 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

Read more about downsizing on Seniors Guide:

A Guide to Downsizing With Grace

Sandra Block

Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit