While most Americans still prefer larger homes to small, there are many important benefits of downsizing and moving into a smaller living space. For instance, the advantages of moving into a smaller home often include less debt, more money for retirement savings, reduced stress and fewer personal belongings in need of organization and storage. Not only does downsizing help you to pay off your mortgage more quickly, but your utilities and other monthly bills will be lower, helping you live more freely while saving additional money for the future. However, there are several disadvantages to downsizing as well, including less room in the home for guests and additional space restrictions for personal belongings, storage and new purchases.
If you are thinking about downsizing your home, this guide is for you. To discover the many benefits of downsizing and moving into a smaller home, review the sections below.
What does it mean to “downsize?”
While the tiny house movement continues to become more and more popular in the United States, the median size of all new single-family homes sold in 2017 was still around 2,457 square feet. However, many Americans are discovering the benefits of downsizing their homes, especially older adults, empty nesters and baby boomers. Before we discuss the advantages of downsizing, however, you must first understand what it means to downsize. According to Merriam-Webster, the definition of downsizing is to “reduce in size”. When you downsize your home, for instance, you generally sell your large- or average-sized property and move into a smaller single-family home, townhome, condominium or apartment. If the tiny home movement interests you, you may even choose to downsize your 2,000-square foot home to a tiny house of between 100 and 400 square feet.
What are the benefits of downsizing?
One of the greatest benefits of moving into a smaller home is having greater financial security. After moving into a smaller home, you will also spend less time cleaning the living space, making repairs, mowing the lawn and maintaining the home’s interior and exterior. To explore all the benefits of downsizing in more detail, consider the following points.
#1 – You can pay off your home mortgage more quickly
When you downsize your home and move into a smaller, less expensive space, you may be able to use the proceeds from the sale of your current home to purchase a smaller property. If you can pay for your new home with cash, you will experience the joys of mortgage-free living. This can help you live more comfortably and pay off other bills more quickly. If you cannot pay for the new home with cash, however, you may still be able to pay off the new mortgage more quickly if the property is smaller and less expensive than your previous home. You can manage a quick mortgage process if you make a down payment of between 10 and 20 percent and you choose a 15-year, fixed rate.
#2 – You can pay off other debts more quickly
By reducing your monthly mortgage with a smaller home, you can concentrate on paying off your other debts such as your student loans. If your loan balance is $18,000 and you can increase your monthly payments from $200 to $700, for instance, you can pay off your student loan up to 7.8 years earlier than you would if you had to put that extra $500 toward your mortgage payment.
#3 – You will save more for retirement
When you pay less for your monthly mortgage, you will have leftover funds for more important things—like your retirement. If you save $500 on your monthly mortgage and you invest that savings into your retirement fund, you could save up to $1.6 million in 30 years.
#4 – Less time spent cleaning and maintaining the home
According to the 2015 American Time Use Survey conducted by the Bureau of Labor Statistics (BLS), women spend an average amount of two hours and 15 minutes on household activities per day, while men devote an hour and 25 minutes of their day to household tasks. These household activities include:
- Lawn and garden work.
- Interior cleaning.
- Kitchen clean-up.
When you move into a smaller home, however, you can spend less time on housework and more time doing things you enjoy.
#5 – Less money spent on utilities
When you live in a larger home, you will need to pay more to heat, cool and power your living spaces. Additionally, your appliances and water heating expenses will be higher than they would be if you lived in a smaller home. According to the U.S. Department of Energy, for instance, the average American family living in a typical single-family home spends $2,060 per year on their utilities. However, utility costs for apartments average $1,290 per year, almost $1,000 less than a typical family home.
#6 – You may consume less
When you downsize your home, you may lose additional storage space. While this may seem like a disadvantage to some, there are benefits of having less space to store your new and old purchases. With less space in your home, you will likely purchase less food, consumer goods, clothing and electronics, helping you to save money and keep your living space clean, organized and clutter-free.
#7 – Smaller homes are friendlier to the environment
Generally, smaller homes use less resources to build and maintain than larger properties. As such, moving into a smaller home will help you reduce your environmental footprint. Additionally, less time spent inside the house will get you outside walking, biking or staying physically active.
#8 – You may feel more social
If you live in a large home on a spacious lot, you may never meet your neighbors and you may not leave your house very often. Since smaller homes are often built with less space in between each property, downsizing may encourage you to venture outside more frequently and interact with your neighbors.
#9 – You can afford a property in the city
If you dream of living in a major city, you may not be able to afford this luxury unless you move into a smaller single-family home or an apartment. For instance, the average cost of renting a two-bedroom apartment in New York City is $1,638, compared to the average home price of $455,500.