Why you should consider downsizing
Let’s face it, the more space you have around your home, the more space you tend to fill up. And that can cost you in many ways…
Luckily, we don’t have that problem any longer.
We downsized this past summer, and we’re very happy we did.
We’ll be inching closer to financial independence because of it.
Our former home.
We “did the math” long before we moved – you can check out my survival guide on moving here – and now that we’re a few months into our new condo, I have some benefits to share when it comes to downsizing based on my reflections of this experience.
Let me know your thoughts in a comment below!
- Lower utility bills.
Unless your current home is super energy efficient right now, it just makes sense that a smaller home (or condo) would cost a lot less to heat or cool.
In our case, I’m projecting we’re going to save at least $100 per month in heating and cooling costs alone in our condo instead of utilities used in our former three-bedroom bungalow. We feel good about this not only because it helps our bank account, but it also helps our environment. Moving on to experience #2…
- Reducing our environmental footprint.
Why on earth would two adults (with two cats) need a three-bedroom home? Do we need two TVs? What about that second (although nice!) sectional couch in the finished basement we used just a few times per year?
We don’t. No. Of course not.
In moving from our bungalow this summer to our 1,200 sq. ft. condo in our city, less square footage has translated into owning less stuff, less energy expended to maintain our place, and therefore less overall waste. With minimal places to put our belongings, we less supplies purchased to maintain our home, we’ve reduced our footprint. There is simply no room for materials that will not be used frequently. In the process of downsizing, we’ve either sold and/or donated many gently used items. I can count at least two full carloads of clothing or gently used good that went to The Ottawa Mission alone. Donating goods has also made us feel good in that we are re-purposing items to those in need. There are so many people in need…
- More time.
Less space to clean, less house to maintain, less to manage overall has resulted in increased free time. This time has been utilized to walk to groceries, events or simply get out and exercise. Yes, the last few months have been busy in setting up the condo/getting organized including trades coming in and many some necessary adjustments, but over time I know we’ll get more value-added time back in our lives. This will be a huge positive related to item benefit #4.
- Improved wellness.
In our condo, we’re now 3 km to work. We’re a 10-minute walk to groceries. We can shop at dozens of stores with ease. I have access to great biking paths along our world-famous Rideau Canal.
There are hundreds of restaurants within a 30-minute walk. If I need to get across our city, our have new light-rail transit system only a few minutes walk down the road. These are just some of the benefits and accessibility we’ve gained.
With a smaller home footprint, we have less responsibilities associated with our property. This has translated into less things to worry about and for me personally, less stress. We’re no longer overwhelmed with the prospects of snow removal or seasonal yardwork or funding major capital expenses like roof or deck repairs.
I believe wellness is often an overlooked key ingredient in any journey towards financial independence – wellness that I’m taking more seriously now.
- Cashflow diverted to cover other expenses.
With one parking spot associated with our condo unit, coupled with our ability to walk to pretty much anything, there is no longer a need for two cars. We sold one of our cars to a family member this summer (thanks again!) so now we’re a one-vehicle household.
Accessibility to amenities has reduced our gas consumption. I can count on one hand how many times I’ve put gas in our car in the last three months. Winter might change that a bit, but for now, I love the fact I don’t have to drive anywhere unless the weather dictates it.
Reducing our household to one car has saved us about $300 per month, on average. That money can now be diverted into maintenance costs/condo fees for our building – which include insurance.
While downsizing sounds great…
Downsizing also came with some drawbacks. We miss some friends and great neighbours in our former area (but we hope to connect with them this fall). There is no longer a spare room for guests (something we’ll need to manage with the odd overnight guest at some point). Trading-down was initially stressful, there was a LOT of change and that was challenging to navigate through as a couple (or at least it was for me…).
Yet given where we are in our financial plan, in that our ability to “live off dividends” is getting very close in the coming years, we felt this was the right decision at the right time. Although our smaller home in the city has cost us more money initially (to buy, to move, to get established) we believe it will open up more options for us, with work and with play in the years to come.
View from our condo terrace.
Is downsizing right for you?
Downsizing can open up a new chapter for you too. Whether you are an empty-nester, single, a couple with no kids or you’re simply aspiring to start fresh – downsizing can offer a host of environmental, physical, mental and financial benefits.
The reality is, you really don’t need as much space or stuff as you might think you do.
Have you considered downsizing? Will you pursue this eventually? What is the square footage of your home and/or do you own a McMansion in the suburbs? Share and comment away.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Hi Mark, I really appreciate and enjoy your articles. I also have a lot of respect for your ideas and discipline in investing. Perhaps not for the condo move though. My wife and I looked at many condos over the last year or so with downsizing in mind, but besides the ever increasing condo fees, it’s the assessment fees that seemingly come out of nowhere. In one case, owners were assessed 36k over three years for leaks into the underground parking. Another place, 14k for the same problem and my son, a whopping 45k for a new building envelope for his 35 story condo tower. I realize older buildings are susceptible to more expensive assessments, but newer ones also had problems due to shoddy construction. I’m glad you found a place that seems reasonable and I hope it stays that way.
All the best!
Kind words Martin!
I do hear you with the fees. Our condo fees are just shy of $550 but will go up next year. That said, our building is very energy efficient. Now paying ~$100 per month for heat (gas), hydro and water.
We purposely bought in this size of condo.
https://www.buzzbuzzhome.com/ca/the-corners-on-main
There was no way we would want to live in a 35-storey building. Ours is 6-floors 🙂 Perfect, boutique size just minutes from downtown.
I’ll keep you posted via the site how it goes!
Must consider that you don’t own the land with a condo and the building continually depreciates. Also, the monthly condo fees always go up. Plus you have to add special assessments. Also consider, the rate at which new condos are springing up like weeds in major cities, makes me wonder whether or not they will appreciate over time. I like the idea of not cutting the grass, but I hate not having a yard and hearing the people below, above and beside me. I do like the idea of being able to travel withuot worrying about have someone look after your home.
Yes, true Tom.
Well, our condo has gone up about $50-80k in value since we purchased it. We are fortunate to have a nice private terrace. We don’t hear much if anything below us and we only have two neighbours beside us. So far, so good.
Yes, folks that want to downsize best do it now while there is some inventory. Large houses (>2,500 sq. ft.) won’t be in demand forever – the environmental push is going to make sure of that…it’s wasteful…
In Ottawa, for context Rob, the single family home in the city is approaching $1 M. Depending on the area, it’s $1.5 M or $2 M.
I know because they are in my neighbourhood and I see them from the 6th floor terrace I’m in 🙂
I’m happy to downsize since in the coming years, if I become FI, I do whatever I want and spend however I please. The countdown is on.
I am not downsizing in size (approx. 1,200-1,300 sq ft) in my upcoming move, but I am in price. I sold my home in a trendy neighbourhood ($419,900) and purchased a home in a transitioning neighbourhood ($274,000). With my mortgage/tax savings, I shaved approx. 4 years off of my early retirement goal by paying myself the difference from one home to another. Each neighbourhood is a bus/bike ride from work, so no added transportation costs. All in all, a win!
Awesome Dana.
re: “I shaved approx. 4 years off of my early retirement goal by paying myself the difference from one home to another.”
Very smart.
“In fact, the almost 40 acres of land might be even more attractive to a buyer as they could build whatever *they* like as opposed to putting up with the house we have.”
Agree, matter of fact my old hair dresser did just that, sold their place and used an inheritance to build their dream property, but that wasn’t my point. It’s at some point your average baby boomer will want/need to downsize. For some the shock will be that their trophy house isn’t worth as much or that condo prices have risen so much their forced into rentals. This is now (broadly) the case in the KW area where condo’s cost more than SFD.
The other more serious issue is where people are forced through ill health to downsized. When facing down a life threating cancer or struggling to get in and out of the bathroom or bed due to stroke last thing on your mind is updating the 30 year old carpet because the agent told you that if you don’t it will make your place much harder to sell.
Based on my (very limited) personal experience I suspect most people will wait too long to downsize
“The other more serious issue is where people are forced through ill health to downsized.”
This would/could also apply to the home they downsized to. A catastrophic health issue is obviously by definition catastrophic. IMO, moving into a rental can be the most viable option. I know many around here do this and we will likely look at it when/if the time comes.
I’ve also maintained that a house ought not to be considered a cornerstone of one’s investment portfolio.
Well said Lloyd. I did a net worth update the other day (not that I care about such things very much) and calculated our condo is ~ 35% of net worth.
If it becomes <20% I will be even more happy 🙂
“soon that house will be a millstone around their necks.”
Our house could burn down tomorrow and it would be insignificant in our financial situation. In fact, the almost 40 acres of land might be even more attractive to a buyer as they could build whatever *they* like as opposed to putting up with the house we have. I do agree that with aging Boomers there may soon be increased numbers of larger houses on the market. This may result in possibly having to sell for less than anticipated but I doubt it will make many of us destitute.
You will be fine Lloyd as you don’t care about selling – it’s a home for you. Other Boomers or seniors, not so much, they are relying on that cash cow.
I don’t think downsizing has to mean a high rise apartment.
I really detest these and could not live in one. Taking an elevator to where I live- no thanks.
And for those who say they will do it after the kids move out, don’t you want them to come and visit you? You don’t want to see them and their spouses and the grandchildren?
I just visited a friend who bought an even bigger place after the kids left, but in a better location. I wouldn’t want that maintenance as it is a very old, but beautiful, house. 90 years?
I like yard work and enjoy making a beautiful garden. I had to take over mowing the lawn a few years ago, as my hubby was so bad at it. Maybe it is just husbands that dislike this job?
Needless to say, I plan on staying in my house forever, but it is not really large.
Correct: “I don’t think downsizing has to mean a high rise apartment.”
We purposely bought a small, boutique condo in Ottawa. The picture in the post is from the 6th floor of 6. Top floor.
Older homes have character. In my city (Ottawa) they are gorgeous. I just can’t afford one where we live (> $1.5 M) and we don’t need the space.
After we get our terrace more green in the spring of 2020 I’ll post some pictures 🙂
Cheers,
Mark
Hi Mark, So my Husband & I did the downsize to a 1500 square foot condo in Barrie almost 3 years ago, we are both 58, I am an early retiree, top sales person for a small family owned business & they decided my services were no longer required, lol. They made my decision for me before we moved into the condo. My Husband has 4 years to go and has a pension. We are sitting on some money from the big house downsize, condo is paid for. TFSA is maxed out, we decided to just move that extra house money around to best interest accounts in case we decided to make a house change. We have all our rrsp’s in dividend/drip paying stocks We both love the condo, lifestyle etc. I personally am nervous about the maintenance fee which has risen to $550 per month. I will see if it rises this November again. I am thinking about going back to freehold (small townhouse/bungalow). What are your thoughts on this maintenance fee, I was all for it, but I see it rising?
Congrats on the financial success thus far Sandra – thanks for being a fan of the site.
“sitting on some money from the big house downsize, condo is paid for. TFSA is maxed out…”.
You folks sound like you’re doing OK.
I really wouldn’t worry about the condo fees. Dividend stocks and their raises should offset inflationary pressures. If not, you can simply draw down assets slowly over time since you’ll have CPP + OAS which have inflation mechanisms built in.
All told, major first world problems 🙂
Best wishes and hope you continue reading!
Mark
Rather than write out all of our reasons for deciding not to move to a condo, I’m saying “ditto” to Brian’s post, and will add:
– ease of letting our dog out – we live on a large country lot,
– I like watching movies with the surround sound cranked up to IMAX levels.
– No problems with crazy close-by neighbours.
A big problem for us would be people who smoke on their balconies. We‘ve stayed in numerous condos around the world and despite the building’s rules, some people can’t or won’t follow them. In such cases, the balconies have been unusable and the balcony door had to remain closed.
For us, the pros of living the non-condo life outweighs the cons.
Very fair points Bob. Thankfully, on the smoking front, this is non-smoking building – no exceptions including the green stuff.
Ultimately, sounds like you know what you want and need for your lifestyle, and that’s great.
Thanks for your comments as always.
So glad you are enjoying the change Mark! I agree with this so much. We’re in a 1,100sft bungalow for the 4 of us and it’s perfect and even a bit big if you consider the basement space we do not use as much.
I look at my parents who are still in their larger home, and all the stuff they accumulated, constant need of maintenance for one thing or another and it just exhausts me. My parents often comment we should trade homes and I simply laugh and reinstate that we are happy in our smaller home, but maybe they should pursue that idea of downsizing. I think I’ll share your thoughts with them to continue motivating them with this idea they seem to be starting to explore!
Ya. My parents are similar. They have complained (a bit) about having too much stuff but really don’t want to part with anything. I hear them, it’s not easy, but you (or they) really need to rip the bandaid off at some point.
For sure – share the blogpost with them – happy to hear their reply or take.
Hope all is well across the river!
Mark
I love my parents dearly but I hope they are slowly seeing the benefits of simplification and downsizing – over time. They have no idea how much less stuff, less things, less material goods will benefit them 🙂
Good discussion, thanks Mark. My wife is sold….me, not yet. I love the nature we are surrounded by and the challenge of keeping a beautiful home looking good. I’m hands on. Keeps me physically and mentally active. To help offset our large “footprint” we’re moving towards hybrid vehicles etc..
You successfully comfort me. We have already bought a Nissan Leaf. So, that’s it, we have reduced our footprint already. We can do more of course. Plan to buy a tesla when our other car becomes really old. Tesla will be more like a big toy for me, not only a car. I cannot afford it yet, need to save for it.
I wouldn’t mind buying a Tesla if our condo had a charging station. Maybe…I will lobby for it 🙂
Got kids Paul? I can’t recall…that could be the difference in downsizing now vs. later.
Smart man on the hybrid. That is our next vehicle actually. Just not sure what to buy…thoughts? RAV4 is a candidate for us.
Mark: Downsizing for us was an amazing thing. In fact we have since decided to downsize further and have put some money down on a new build condo. We are learning to greatly reduce our footprint and love the decrease in fees, and the new condo will come with added convenience. One can unload the gym membership, and it also comes with being able to lock the door and leave easily. It has allowed us to go FI, or even better to work as we wish. The added benefit of the condo and our downsizing will be the ability to AirBnB easily. The drawbacks for us are decrease in space, but we’ve already learned to live with less, and the loss of gardens, but we hope there are some community ones in the new building.
Keep up the great work. Coming up to a year of no work and it’s been a crazy journey
This is where we are coming from Marc. The ability to consume less, have less stuff and reduce our footprint over time appeals to my wife and I as we get older.
Do other folks like or want an acreage? Absolutely, nothing wrong with that – it all comes back to ensuring you are living with intent and aligned to your values. Something I’m certainly gravitating to more and more.
It is my hope we’ll be very close to FI in another 4 years – if we can reach our $1 M milestone and have no debt. Time will tell!
Thanks for being a fan of the site and continued success to you.
Mark
Being a hoarder I can’t see me being all that happy in a downsizing. I’ve thought of all the positives Mark has outlined and in my head I know that is a reasonable and logical plan of action. But then I think of what I’d do without all my “stuff” and I panic. I need my space, I love having the 40 acres around me, I love being able to walk across the road to work in the heated shop in the winter or pulling a tractor out of the machine shed to go “work” in the fields in the summer. We had (technically still have as it hasn’t sold yet) the opportunity to move into a much smaller house in Winnipeg but the panic sets in. The way it sits now, I’m only steps from the cemetery where our plots are so my next “move” will be into a much smaller space. Things can change though.
Hey Lloyd, if you need your space. All good. If that is what makes you happy, perfect. We’re just more mindful and intent on what we really want and need and that’s certainly not a large home.
Things can always change…!
“Things can always change…!”
lol…they always have so that’s a pretty safe bet.
There are many reasons why I could never dream of giving up my home in the country, despite the savings. I need space to work on cars, entertain, and be able to breathe without smelling my neighbours cooking, listening to their music or waiting for an elevator. But I’m sure the big reason why it wouldn’t work for us is we would end up in divorce court if I was living in a shoebox in the sky. Not for me
All valid reasons to “downsize”. It sure seems like it was a good decision for you.
I won’t bore others with the all details but we chose pretty much the opposite a couple of years before retiring (maybe the poster child for doing it differently). For us 1,2,3 & 5 are negative on your scale and 4 is probably a wash. We find ourselves in a little smaller home but on a more expensive large rural property, with lots of maintenance work and cost, climate exposure issues, have to travel by vehicle everywhere for everything. Many things that might possibly worry some folks. Probably have more of just about everything- from 2 car garage to 4 car garage. lol
Very occasionally I think we should go back to the little city apartment or similar we had for a year while we worked on this place, if I allow myself to only think about needs. Then I simply look out the window or think of what some people pay for a week of it and it changes my mind. There’s tradeoffs on everything and we enjoy this lifestyle while our health allows it.
Maybe it will work fine for us for another 10-15 years or maybe even until the end.
That’s the thing. You’ve considered it but it’s not for you. That’s GREAT. It’s an informed decision.
I worry about folks who complain about yardwork, this and that, and figure they don’t have a way out.
Enjoy the lifestyle you have chosen for many years to come!
Thank you very much and the same to you.
I agree and I think people should think about and plan what really works for them. We read often about people who want to downsize but that smaller house or condo costs more than their older large place, and it might eliminate that option.
At some point we may have to move because its too much work or costly to have others do it all. Time will tell.
Indeed. Focus on your goals, your lifestyle, doing what you can for our poor planet (that is dying) and what value you (or your family) will get out of your hard-earned money and nothing else.
I am considering a move next year to a home without stairs and yardwork. I used to enjoy puttering in the yard but after a car accident 2 years ago, I cannot take care of the grounds and I hate the stairs. Your comments on your move and the results are pertinent to me too. Although I love my neighbourhood and neighbours, I am ready to move on to something that fits better with my new lifestyle. Thank you for sharing your experience Mark.
That’s where we landed Jan. It “was time” especially for my wife and we needed a change. So far, this has been overall good but change does come with growing pains.
I enjoy the great outdoors…lawns,trees and gardens and of coarse I’d miss cutting the grass and feeding the birds.
Nothing wrong with the great outdoors Doug. I/we enjoyed our time where we lived very much but it was time to start a new chapter.
Me thinks you made the right move, Mark… all good stuff. Oh, by the way, the car is still running great after a 7500 km jaunt to the east coast… the Rock rocks!
That’s great. I was wondering how your trip was!! Would love to visit that coast at some point.
A debate I often have with the wife (not so much for right now, but once the kids are moved out).
Are you guys planning on ever having kids? Makes a big difference for sure to have the extra space and yard. Personally I am all for downsizing once the kids are out of the house, but convincing the wife will be the tricky part..haha
One thing I will say, regardless of house/condo/apartment I do agree – less space= better. I went from a 700 sq foot house to a 2400 sq foot house. And although I love the new house, in hindsight, we don’t need a dining room (we’ve used it like 4 times) and we don’t need the extra bedroom (kids toyroom).
I am wondering if my husband is thinking about the same thing, how to convince me to downsize once kids move out, LOL.
I am OK to downsize if financially or physically necessary. Otherwise I will just stay here. I hate moving and there are still unopened boxes in my garage from two years ago. My retirement plan considers we will stay in current house forever. I do put a narrow buffer for retirement plan due to this though as downsizing should free quite some cash for us to invest or use for some unexpected things.
No, no kids in our future which makes a big difference on things and the space we need.
I can appreciate if you have 2-3 or more kids like some families do these days you need some space, likely for sanity if nothing else.
I’ve always found less space is better but then again: happy wife = happy life. I’m sure she’ll read this at some point 🙂
Glad to see you enjoy your condo life. Definitely right decision for you.
I don’t think I will downsize in the near future. My plan is staying in my current house as long as possible. I probably need to hire somebody to take care of the yard and somebody to clean up the house some point in the future. Home theatre and being able to play ping pong at basement are really important for me. If not for those two things, I am all for condo life.
We had a ping pong table as well May but it wouldn’t fit here. I think my sister’s kids make decent use of it 🙂
If your house is paid off it is debatable as to the financial benefits of downsizing to a condo, especially a condo in the city.
I live outside of Montreal so housing prices are less expensive so sale value is also less. To move in to a condo in the city would leave me with a mortgage to pay.
Plus as things are right now I get to make Raspberry jam, Apple and Grape jelly from plants on my own property. I get to BBQ a turkey for Thanksgiving, Christmas and usually Easter without bothering the neighbours. Is it all honky dory? No, you do have to maintain the property with painting, grass cutting and snow clearing. However my two cars did not require that I purchase another parking spot.
Personally I will stay here for as long as I can simply because it suits me and I do not wish to let go of the lifestyle I presently have. When I can no longer maintain the place well then it will be time to move on.
No one has the same situation so to each their own. You have to not only know what you want but also what you are willing to change to achieve it.
RICARDO
Very true – to each their own.
The condo is not quite paid off but should be in the coming years. I don’t want to tell you how much extra this move cost! But, such is life.
There are always trade-offs with everything I feel. No condo nor home is perfect. Always stuff to do…
“You have to not only know what you want but also what you are willing to change to achieve it.” Sage advice.
I have to agree with you Ricardo – if the house is paid off the incentive to downsize is much reduced – my sticking point is the condo fees (alone – no property taxes) for a reasonable place where I live would exceed the total housing cost for my house (utilities, taxes, insurance and maintenance ) and I wouldn’t have the biggest pleasure of single family home ownership – space, inside and outside.
Early this year I (and my wife) seriously looked at condos – after looking at a few very nice places, we looked at each other and said – no way – at least now for another decade or so -urban cliff dwelling is not for us 🙂
ps to Mark your new digs’ location is great! but not for me.
my sticking point is the condo fees
Mark how much did this factor into your decision?
More importantly did you look as how the building was run? Is the board keeping on top of maintenance issues, does it have a good reserve, is the building well managed etc?
Living in a condo goes way beyond just the fees
Condo fees suck, I’m not a fan. However, in our building that includes our insurance (as most do) and our building is very efficient energy wise. I expect to pay $150 per month for the coming year in heat, hydro and water for 1,200 sq. ft. We have a 300 sq. ft. terrace that’s 7 ft. x 44 ft. long. We are very fortunate.
For context, if I was factoring in various repairs/maintenance to my older home I was paying ~ $500-$600 per month on average for 8.5 years. If I can pay that, be in the city, be less one car, have better mental and physical wellness, that $600 per month in condo fees is totally worth it for me.
Glad to hear you are enjoying the condo life Mark. Lots of good points, esp the ‘more time’ factor — its one commodity you cant buy and if you can find ways to be more efficient instead of driving back-and-forth to work, the more you can enjoy life and have a better quality of life. I have been working on shaving off little things and finding better use of my time.
cheers
R2R
Great to hear R2R. It will be good to catch up soon.
I decided not to sell my home because condos are about the same price as my small bungalow around here. I also wanted a place for my children to stay when they visit. I would love to do away with the creepy basement and all of the yard work though.
I already pay a neighbour to deal with the snow. After I am debt free I will pay someone to cut the grass. I can then pretend I am enjoying the condo life.
Can you hear your neighbours when they are vacuuming and such at your new place? That was one of my fears of living in a multi unit building.
Nope. re: Can you hear your neighbours when they are vacuuming and such at your new place? That was one of my fears of living in a multi unit building.
Can barely hear a thing from them actually. We hear the dog down the hall but it’s not constant and those neighbours take good care of him/her.
Don’t miss cutting a 1/2-acre of grass every week.
Being debt-free is great Beth – well done!