Downsizing serves homeowners in a variety of ways. Not only can people enjoy premier locations for less, but they’re also setting themselves up for a simpler, often easier living situation. A smaller home means less maintenance work and cleaning efforts, reduced utility costs and a lower carbon footprint.
Traditionally associated with empty-nesters who no longer need multi-bedroom homes, downsizing is experiencing an increase in popularity that spreads beyond the regular fanbase to other generations as well. Both Millennials and Gen X-ers tend to be more mindful about resources and how much they consume, on one hand, and more interested in freeing up money and time for experiences, on the other hand. Additionally, Americans’ increasing love for minimalism is seeing more families embrace the downsizing idea – many of us might not really be prepared for living in an actual tiny home, but we’d surely be willing to sacrifice some space in order to ease the upkeep chores and lessen the financial burden of needing to buy more domestic goods.
On top of that, residents of large urban centers have an extra incentive when it comes to downsizing – big city living is expensive, no secret there, and switching to a smaller home can help with living in the same area, without dedicating a big chunk of your income to mortgage payments.
While all these perks are generally common to downsizing everywhere across the nation, the savings part can differ a great deal depending on location. Where can homeowners enjoy the biggest savings when moving to a smaller home?
We looked at the country’s 20 most populous metropolitan areas to see where downsizing pays off the most. We based our calculations on the difference between the value of a 4-bedroom home vs. a 2-bedroom home in each metro area. We also took into account the difference in property taxes over a period of 10 years, plus selling and buying closing costs for both properties.
There may be other costs associated with downsizing but those can vary depending on personal needs and are generally less of a financial burden. Self storage for example – a service that’s frequently used when moving into a smaller home – costs roughly $127 per month on average. A standard 10×10 storage unit can easily hold the entire contents of two compact bedrooms – much lower than the residential price for the same square footage.
Homeowners in the Bay Area can save ~$400K by downsizing from a 4-bedroom to a 2-bedroom home
The San Francisco-Oakland-Berkeley metro remains one of the most engaging, beautiful, and expensive places to live in the U.S. – a mix that makes those fond of the Bay Area constantly explore and adjust housing expectations to be able to live comfortably. Downsizing provides a good option to enjoy the area without paying an arm and a leg on housing.
The value of a 4-bedroom in the San Francisco metro stands at almost $1.6 million, while a 2-bedroom home stands at around $1M, resulting in a difference of about $530,000. The property tax difference between the two types of home totals over $28,000 for a 10-year period. After factoring in the closing costs, homeowners willing to downsize end up with over $400,000 in savings – the most among the 20 biggest metros. In the case of the city of San Francisco proper, savings are even greater: homeowners trading a 4-bedroom home for a 2-bedroom one can save no less than $535K per move.
Furthermore, when looking at the three major cities in the San Francisco metro area and at how much downsizing homeowners can save by moving from one to the other, the figures tell a much more nuanced story.
- Downsizing from the city of San Francisco to Oakland results in almost $1.2M in savings
The most advantageous downsizing move is from a 4-bedroom home in San Francisco to a 2-bedroom in Oakland, a move that can get you almost $1.2 M in savings. Swapping San Francisco for Berkeley and, at the same time, downsizing from a 4-bedroom home to a 2-bedroom one is a move that could potentially save almost $670,000.
When moving from a 4-bedroom home in Berkeley to a 2-bedroom one in San Francisco, homeowners can save somewhere around $530K.
San Diego homeowners can pocket over $260K from downsizing
San Diego-Chula Vista-Carlsbad has never been particularly easy on the wallet and downsizing here can provide some financial respite. Residents switching from a 4-bedroom home to a 2-bedroom abode in the metro area can save over $260K overall. Homeowners that are planning to downsize, but don’t want to leave the center of the metro’s action can still enjoy about $315K in savings by relocating within the city limits of San Diego, from a 4-bedroom home to 2-bedroom one.
In terms of city-to-city downsizing between the metro area’s major cities, Carlsbad to Chula Vista brings in the biggest savings, of almost $760,000. The smallest amount of savings results from downsizing from a 4-bedroom home in San Diego to a 2-bedroom one in Carlsbad – about $250,000.
The Los Angeles metro ranks third, winning the downsizing savings podium for California
Another Californian hotspot, the Los Angeles-Long Beach-Anaheim metro area, ranks third in terms of downsizing savings. The value of a 4-bedroom home stands at almost $960K, while a 2-bedroom one sells for around $640,000 – a difference of nearly $314K. The property tax savings over a 10-year period amount to a substantial $19,000. After factoring in closing costs, the savings from downsizing in the Los Angeles metro area end up at $240,000 on average.
Looking at potential savings when downsizing in LA proper, moving from a 4-bedroom home to a 2-bedroom in the city can save homeowners about $200K.
Angelenos who seek an even better deal can choose to relocate to a smaller home in either Anaheim or Long Beach. Downsizing from a 4-bedroom home in LA to a 2-bedroom in Anaheim saves the potential mover over $420K.
Moving to a smaller home in Anaheim, even as a young family with children, can be feasible, and even fun, considering the many attractions in the city that cater primarily to families, such as Disneyland, the Disney California Adventure Park, and the Aquarium of the Pacific among other equally fun yet lesser-known venues. Huntington Beach is always a good spot for spending some time outdoors while the Anaheim Packing District is chock full of cozy restaurants and cafes. Even better, while consumer prices in the two cities are relatively close, restaurant prices in Anaheim are 24% cheaper than in LA.
Engaging in the same type of move but from LA to Long Beach results in slightly smaller, but still very significant downsizing savings of almost $356K. Granted, exchanging a city of almost 4 million people for another with about 470,000 residents implies a huge lifestyle change – however, it can be the right move for empty nesters, retirees or simply people who crave more peace and quiet in their lives.
Downsizing in Seattle and Miami metros brings savings of around $230K
Seattle-Tacoma-Bellevue ranks fourth among the country’s largest metros in terms of potential downsizing savings. After accounting for property tax differences and closing costs, the savings from downsizing in the Seattle metro area stands at roughly $235K.
Downsizing from a 4-bedroom home in Bellevue to a 2-bedroom one in Tacoma brings the biggest savings in terms of city-to-city moving, at almost $1 million. Leaving Bellevue for a smaller home in Seattle results in savings of almost $600,000. Seattle to Tacoma downsize generates savings of almost $675K, while Seattle to Bellevue downsizing moves can result in over $400K in savings. Choosing to stay put in the city of Seattle, but in a smaller home, will get homeowners about 290K in savings.
Miami-Fort Lauderdale-Pompano Beach ranks fifth for downsizing savings. Total savings calculated for a 10-year period stand at around $233,000, with the value of a 4-bedroom home exceeding $500,000 and a 2-bedroom one costing almost $250,000 in the Miami metro area. Considering the city of Miami alone, the potential savings for downsizing hover around $160,000, while downsizing within Fort Lauderdale is a lot more profitable, resulting in almost $364K in savings.
Regarding downsizing savings when moving between the metro area’s major cities, the most profitable route is from a 4-bedroom home in Miami to a 2-bedroom one in Pompano Beach – this move can get homeowners almost $290K in savings. Downsizing from Miami to Fort Lauderdale comes with an attached discount of over $150,000.
Newton to Boston is the most profitable downsize in the Boston metro area
The Boston-Cambridge-Newton metro area ranks sixth for downsizing savings among the country’s top 20 biggest metros. The value for 2-bedroom homes in the metro area is $455,000, compared to over $730,000 for 4-bedroom homes - in other words, there’s only a 40% difference between the two types of homes. This results in downsizing savings of $233K across the metro area as a whole.
However, numbers are quite different for residents downsizing between the metro area’s main cities. Homeowners who are downsizing from a 4-bedroom home in Newton to a 2-bedroom one in Boston are gaining an impressive $690,000. Those who prefer to downsize from Newton to another smaller city can choose Cambridge and walk away from the deal with savings amounting to $500,000.
However, there are downsizing routes within the Boston metro area that result in extra spending rather than savings. Due to the higher price of homes in both Newton and Cambridge compared to the city of Boston, Bostonians who are keen to downsize to Cambridge have to spend an extra $184K to achieve their goal, while the ones interested in Newton must pay about $50,000 to relocate to a smaller home here.
New York-Newark-Jersey City ranks seventh among the country’s biggest metros for downsizing savings
Downsizing from a 4-bedroom to a 2-bedroom home in the New York-Newark-Jersey City metro area results in overall savings of roughly $215K for homeowners. The home value for a 4-bedroom stands at $615,000 in the metro area, while for a 2-bedroom home is around $380K.
Naturally, when downsizing between the three main cities of the metro area, the amount of savings varies significantly. Downsizing from a 4-bedroom home in New York City (with all its boroughs considered) to a 2-bedroom one in Newark will get homeowners savings of over $500K. Relocating from NYC to a smaller home in Jersey City results in savings of over $170K.
However, as many New Yorkers are less likely to be willing to leave the thrill of Manhattan living for outer boroughs or smaller cities like Newark or Jersey City, we wanted to see what the options are for those who want a more relaxed, budget-friendly lifestyle in a smaller home while still keeping a Manhattan address.
The value of a four-bedroom home in ZIP Code 10013, covering parts of the Tribeca and Soho neighborhoods, Manhattan’s most exclusive (read: expensive) area, now stands at over $6.4 million, a hefty price tag even by NYC standards. Naturally, downsizing from 10013 is bound to bring in some serious savings if you’re willing to live smaller. Switching from a 4-bed home to a 2-bed home in the same area will give you an excess of $3.2 million, following acquisition expenses. Moreover, if you’re comfortable with leaving Tribeca for other popular Manhattan neighborhoods will help you make even more savings.
Take 10002 in Lower East Side, a sought-after NYC neighborhood. It has generated almost $690M in home sales over the last three years, making it stand out as one of the most popular areas for Manhattan home purchases, according to data from PropertyShark. Relocating from a 4-bed home in Tribeca to a cozier, 2-bedroom home in Lower East Side will likely put more almost $4.9 million into your pockets.