Upsize or Downsize? How to Choose a Forever Home That Actually Fits You

Keith and Sandie Thomas moved from an 1,800-square-foot home in The Villages, Fla., to this larger home nearby.
Keith and Sandie Thomas moved from an 1,800-square-foot home in The Villages, Fla., to this larger home nearby.

Summary

Determine what your needs are now, and what they might look like a decade from now.

Does size really matter?

When it comes to houses, real-estate professionals like to focus on location, location, location. But while location is certainly a key consideration in any home purchase, size and function matter just as much, particularly to empty-nesters purchasing what they hope will be their last home.

Consider the experience of Keith Thomas, 69, and his wife, Sandie Thomas, 68. In November 2022, the couple moved from an 1,800-square-foot home in The Villages, Fla., to a larger model a short distance away. After paying $770,000 for their new home, they then renovated it, adding 1,600 square feet of space. The home, now 4,400 square feet, has three bedrooms, four baths, a large screened-in pool and a 1,200-square-foot lanai that the couple uses frequently to entertain. While the size of the home was a factor in their purchase, the ability to entertain outside and the privacy afforded by the half-acre lot were more important to Thomas, a retired rice farmer who previously lived on 300 acres in Arkansas.

“We moved to Florida to be outside year-round," he said. “The outside space is really important. It feels a little more like country."

Jamie Gold, a wellness-design consultant in San Diego who holds the Certified Aging-in-Place Specialist designation from the National Association of Home Builders, said that older home buyers should focus on whether a house fits their needs no matter what the size. “Determine what your needs are today and what they are likely to be five or 10 years from today," she said. “Don’t look at the choices you made in your last home. Your needs were different then."

Gold, 63, speaks from experience. She’s in the market for a home herself, and the features she’s looking for differ from the three-story townhouse she currently calls home, where her den functions as an office and a tiny space in the living room is an ad hoc gym. She’s looking for a single-family home with four bedrooms, or three bedrooms and a den, so she has rooms for a dedicated office and home gym. Plus, she wants a place with a first-floor primary suite for future accessibility, and a fenced-in backyard so she can spend more time outdoors.

Many older adults such as Gold have the financial flexibility to upsize to a larger retirement home if they want. Home prices in the Sunbelt, a region popular with older adults planning to retire, are frequently lower than they are elsewhere in the country. Exploding housing values means that homeowners over 65 have lots of equity in their existing home to flip into their retirement home, according to studies. But the vast majority of older adults prefer to downsize, according to Brad Hunter, president of Hunter Housing Economics in West Palm Beach, Fla., who said that 80% to 85% of home buyers age 50 to 60 either downsize or purchase a home the same size as their last. Some, such as the Thomases, then realize they have gone too small for their retired lifestyle.

So how do you determine what size your final home should be?

Here are some things to consider when deciding on the size of what you expect to be your last home.

Make housing decisions based on your fixed-income future. It is essential that empty-nesters not overpay on a larger home and then face the risk of running out of money in retirement. “There is an age-old rule of thumb that you should spend 4% of your retirement savings per year," said Ken H. Johnson, Ph.D., a real-estate economist at Florida Atlantic University in Boca Raton, Fla. “Add in Social Security and other cash flow, and that should cover your budget, including housing costs. You can then determine what you can afford to pay for housing and still have sufficient money for the rest of your life."

Be honest about how much home maintenance you’ll want to do in retirement. The larger the home, the more maintenance required, so have a frank talk with yourself about what the retired-you will want to deal with, and remember that a sudden health crisis might make this decision for you.

The larger the home, the more complex the maintenance, said Jack Erb, Ph.D., an economist for Thumbtack, a home-services website. He advises that owners budget extra for the regular maintenance that larger homes require to retain their value.

But even small homes can come with systems, such as a pool, a smart-home system, irrigation, solar panels and batteries and other complexities, that can create expensive maintenance and upkeep headaches. Regardless of what size home you buy, if you’re not handy, simple homes are usually the most happy homes.

Gold suggests that older buyers investigate what types of post-purchase support and maintenance programs are available when they are looking at homes. Some home warranties might not cover all of a home’s systems, so identify local pros who can handle the regular maintenance for these systems and make sure to factor their fees into a home’s monthly expenses.

Focus on function, not square footage. How will you use the house in the future? You might have thought your days of cooking Thanksgiving dinner were over because your children have their own homes. But as you make new friends and socialize more, that dining room you opted not to have may start to look pretty good. How likely is it that your grandchildren will visit enough to require extra bedrooms, play space and toy storage? Do you plan to keep working and need office space, or will you want a dedicated room for poker or mahjong? And what about the latest trend in design for older adults: snore rooms, secondary primary bedrooms so spouses can sleep separately in peace. It can seem impossible to accurately predict what your future needs might be, but buying a house without seriously thinking about them can lead to buyer’s remorse—and more house-hunting.

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