Beware, downsizing comes with some hidden costs

When Bryn Smythe, 64, and Jack Reuben, 67, downsized from their three-story, 100-year-old home in the Philadelphia suburbs to a nearby town house in 2023, they were determined to save money.

“In the area that we live in, it was really easy to find something equally expensive as what we just sold,” Smythe said.

Finding a home within their budget took patience and compromise. The town house wasn’t picture perfect when they moved in — it needed new flooring, paint, kitchen renovations and, later, an HVAC system — but it fit their needs, and they were prepared to make it work.

“We are willing to update it,” Smythe said. “Some people our age that are downsizing, they don’t really want to do work, they want it to be pretty much OK when they move in.”

Move-in-ready living is attractive to older homebuyers, many of whom swap high-intensive family homes for low-maintenance town houses, carriage homes, ranches or senior living units. Financially, these moves can leave seniors with an even trade instead of the high profits they expected. But there are ways to get the most out of your home.

Sue Fitzgerald, a real estate agent with Compass who helped Smythe and Reuben sell their home, said that seniors were “often shocked” to find that downsizing was “still quite an expensive step,” even when their homes had appreciated a great deal. This can be emotionally and economically challenging, she added.

It can also be hard to avoid. In Pennsylvania, the median home age is 60 years old, and 67% of the housing stock was built before 1980, according to 2023 census data. Newer housing has been slow to pop up and, when it does, can attract heavy competition.

Kate and Paul Hermans, both 57, chose to rent an apartment after selling their “architectural gem” of a home in Radnor, Pa., while waiting for their newly purchased home in Malvern, Pa., to be gutted and renovated to their liking.

“Our ideal would have been to sell and to purchase the home that we would move into,” Kate Hermans said. “Eventually it became clear that we weren’t going to be able to do that, and so we were going to have to find a bridge solution, which was renting.”

Selling was less of an issue for the Hermanses, whose house quickly captivated young buyers. But not all older homes go so easily. In addition to home prices, today’s interest rates are higher than they were a few years ago, and interested buyers don’t always have the financial means to put in high offers. The Hermanses said their buyers relied on a combination of mortgages and parental support to fund their move.

Fitzgerald said that many millennial and Gen X buyers, who are more likely to be interested in larger homes, didn’t have the time or interest to fix up an outdated house.

“They are spread thin, and they want to be able to move into a house that is fresh,” she said. “That is a very different perspective than the seniors had when they were purchasing the house. That generation has a hard time understanding how the newer, younger buyer is expecting a picture-perfect house.”

“That’s if they’re letting their agent help them with the decisions,” Gordon said. “If they go in and say, ‘I’m going to redo my kitchen and make my house more valuable,’ but they choose everything that they like, that might not be the trend, that’s not going to serve them well.”

This summer, a client asked her for advice on converting a bedroom into a primary suite. This was an intelligent choice, she told them, that would add value to their home.

Before Smythe and Reuben sold their home, they considered refinishing their floors to appeal to new buyers. Fitzgerald discouraged this, recommending more cost-effective investments like reglazing original bathtubs. They followed her advice, and ultimately, their decisions paid off. The house sold after two days on the market, Reuben said.

Perhaps more prudent than large renovations, real estate agents encourage older adults to make design edits to their home, such as removing carpets, wallpaper or draperies, to appeal to younger generations. Such swaps can make homes more photogenic and, in the age of Instagram, attractive to home seekers.

According to a recent report by the National Association of Realtors, 83% of buyers consider photos a valuable feature when searching for a home online. People who list their homes unedited may find that they are on the market for longer or sell for a lower price.

Too often, Fitzgerald said, health scares like falling down stairs force older adults to downsize, stripping them of extra time to plan. Agents urge older adults to prepare for downsizing — to avoid financial and medical calamities — before they know if and when they will flee their nest.