According to recent data, the average size of homes in America is shrinking. Where in 2015, the average size of single-family homes was 2,500 square feet; in 2018, that average dropped to 2,320. Though that is not a huge drop, it shows that more and more people are choosing smaller homes.
Many of those who choose to downsize are empty nesters who do not need a large home for a growing family anymore. In Maryland, the number of older adults nearing the empty nest stage is growing. In 2016, Montgomery County alone had 288,000 residents age 55 and older, and every day more people are added to this number. This means a large number of people potentially looking to downsize.
Downsizing from a large family home into a smaller one has many benefits, including both economic benefits and overall comfort benefits. Here is a closer look at some of the ways you can save by downsizing, and how downsizing might affect your family’s overall comfort and well-being.
Empty Nesters and the Desire to Downsize
While the age of an “empty nester” is going to vary from one family to the next, at some point, most parents will send their children out on their own. When that happens, the parents are often left to wonder what to do with their large family home.
Of today’s empty nesters, around 36 percent indicate they plan to move when their children are gone. An additional 55 percent indicate they will move when they retire. While there are many potential reasons for these moves, for some, it’s the desire to have a smaller, easier to maintain a home that prompts it.
Downsizing Leads to Cost Savings
People who choose to downsize have many reasons for doing so, but cost savings are one of the biggest. There are four main ways you can save by downsizing. These include:
Cost of Utilities
The larger a home is, the more it costs for electricity and heat. Your utility costs relate directly to the size of the home. If you are paying an average of 0.12 cents per square foot for utilities, and you have a 2,500 square foot home, you will spend around $300 a month. Downsizing to a 1,000 square foot home drops that rate to $120 per month, which is a sizable amount of savings. If you are maintaining a home that is larger than you need, you are spending money on utilities unnecessarily.
Cost of Home Maintenance
Home maintenance is also easier and more cost-effective with a smaller home. As people get older, they may not want to spend their time and energy cleaning and maintaining a home. A smaller home takes less effort and money to maintain. Downsizing to a home within a planned community that offers included maintenance can also lessen the load, allowing someone else to handle tasks like lawn mowing and snow removal.
Cost of Insurance
Homeowner’s insurance costs typically drop when someone chooses to downsize. Homeowner’s insurance is based on the replacement cost of the home, among other factors. The larger a home, the more it costs to replace, so the more the insurance will cost, and the smaller the home, the less it costs to insure.
Finally, in many instances, a smaller home costs less to purchase. This can lower the monthly mortgage expense and frees up more money to enjoy retirement or save for retirement. Even for those who own their houses outright, downsizing can allow them to get some cash from that equity, purchase another home, and enjoy some of the equity they worked hard to invest in their homes.
For many empty-nesters, downsizing makes a lot of sense. Paying extra for utilities and insurance for a larger home does not. If you are ready to downsize, the right mortgage will make your new home even more affordable. Work with local mortgage professional Drew Gilmartin to find the mortgage product that best fits your need. Contact Tom Cumpston at First Home Mortgage for professional guidance as you look for a home loan for your new, smaller home.