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Downsizing Basics

by Tim Isbell     (#retirement, #realestate)
posted August 2013

Are you thinking about retiring or downsizing? Are your kids hinting about it? Do you know someone who is entering the downsizing season? Then I hope you'll read this post, either for your situation or to pass it along to someone you know.

I’m certainly not a downsizing expert, but Robin and I are in the middle of it right now, and we're learning fast. This post unpacks what we've learned so far.

I realize that everybody, every couple, and every family has their unique makeup and circumstances. Yours is different from ours. So I won’t try to tell you how to traverse this season of life. But I will share some of our journey and trust you will find it helpful.

We decided to downsize before life forced it on us.

In recent years, both Robin and I have met significant health issues. We realize that if we live long enough we will eventually need some of the equity from our home to fund life. Besides, with just the two of us, we don't need a big house anymore. It's time to let another family enjoy it. 

So we are downsizing while we are still able to plan and implement it with our strength.

It started with a financial plan.

We started on this a long time ago - back in our early 40’s - and we tinkered with it through the years. This helped us gain confidence to make earlier transitions in our lives, and the financial model became the foundation of downsizing. Years ago I used a spreadsheet; about 15 years ago I moved it to the Lifetime Planner function that is inside Quicken.

For a detailed look of the financial dimensions of downsizing houses, see Home Sale Math

Choosing our geography was easy.

We are fortunate that our kids, grandkids, and Robin's mother live within a 20-minute drive. So even though Silicon Valley is a very expensive housing market, we intend to remain here. In a medical emergency, there is help available within minutes. In the event of an extended need, there are several adult family members who will volunteer to see us through. That’s worth a lot.

Choosing a building is challenging.

We’re looking for a single-story floor plan, or at least one with a master bedroom downstairs and flat access to a bathroom, a kitchen, and a laundry area. This is hard to find in our geography, where land is at a premium and the majority of condos have 2 or 3 levels.

We also want a short walk with no more than a small step or two from the car to the living area. This probably means an attached garage or a building with elevator access. When we’re 80, we may not be able to carry grocery bags or laundry baskets upstairs or long distances.

I occasionally enjoy grabbing a tool and doing some home maintenance, but I prefer other hobbies. So I’m looking for low maintenance. A condo (with a solid Homeowners Association) is lower maintenance than a single-family house with a yard/garden, and an apartment is lower maintenance even than a condo.

Robin loves gardening, so we’d like a place with some dirt. This is also proving difficult to find in our locale.

Walk-ability and stroll-ability are important to us. A nearby park is attractive, so are shops where we can get the essentials without getting in the car. The house we just sold had a great park just around the corner. During our transition, we moved into an apartment. It does not have a park nearby, but immediately adjacent is a lovely little shopping center with many of the kinds of stores we naturally frequent.

If/when we are shut-in with medical needs, we want look out the windows and see people - not just another building, or even a lovely landscape.

We want to live within a 15-30 minutes of good health care. That’s worth a lot to us because the older we get, the more trips to the doctor/hospital we make! It's bad enough to go to many medical procedures, without having a long drive to get there and back!

It's likely that one of us will pass away before the other. So we are looking for a place that if I pass away Robin will find comfortable, safe, and affordable enough to remain. And the same if she passes first.

And we want enough space to have grandkids and other guests overnight from time to time.

Your list will surely be different from ours. But perhaps you got some ideas from our list.

Physically moving from a house to a condo half the size is challenging.

As I write this, we are around the middle of our transition.

Here’s the story:

For the last 20 years, we owned a 2,700 sq ft house with a lot of landscaping. Our plan was/is to downsize to a 1-story, 2-3 bedroom condo of about 1400-1600 sq ft.

In June, we were in a very hot “sellers market.” So we expected our house to sell quickly, but we knew that it might take several months to find a condo and remodel it (if needed) for the long-term.

Like most people, we wanted to know how much we got from selling our house before making an offer on a condo. So we put our house on the market and simultaneously signed a 6-month lease on a nearby two-bedroom apartment. We also rented a 200 sq. ft. storage room nearby. 

Sure enough, our house sold after the first weekend, leaving us with 30 days to vacate. During that time, we distributed some of our belongings to our family, donated many items to a church project, made several trips to Goodwill, and sold our dining room furniture to the buyer of our house. The rest is in a 1000 sq ft apartment, and in a 200 sq ft storage unit.

We’re prepared to remain patiently in the apartment until the right condo comes along.

We've considered staying in an apartment for the long term.

In the beginning, we didn't give this serious consideration. We ran the numbers a couple of times and realized that it was financially reasonable. But we didn't expect to go that way. Living in the apartment for a couple of months has been a good for us. It is teaching us how to live in a 2-bedroom unit, how to efficiently use external storage, and it takes the pressure off of finding a more permanent home. We still doubt that we'll remain in an apartment, but it is more attractive than we expected. Here’s how we currently see the trade-offs.

 Condo Advantages Apartment Advantages
Can paint and even modify the structure someFrees up much more operating money
More likely to have a garage, maybe one with some storageFewer maintenance responsibilities
Might have access to small gardening area(s)Independent of Home Owners Association difficulties
More control over appliances, fixtures, and quality of maintenanceEasier to move to another address/geography if either becomes necessary (including in the case of a surviving spouse)
More likely to have an inside laundry 

Be sure to check out...

A month after posting this page I posted Home Sale Math, which explains the math involved in selling a house and buying another one.

And a year after posting this page we were through the downsizing, which involved purchasing a house suitable for retirement, doing a major renovation of it, and moving in. For the insights from this season see Downsizing Followup


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