Downsizing -- pros/cons?

I thought the prices would creep down as interest rates crept up… but that seems not the case.

I feel fortunate that we’ll be fine whatever the market does. (House is paid off and worth well over 3x what we paid in 1993). The price of patio homes etc look ridiculous to us, but most are less than what we’d get for ours. We used to think of future “downsizing”, but from a financial perspective it will be closer to a “lateral move”. Over time I’ve come to realize that is OK if the next place provides a more practical situation for our later years and the ability to defer need for move to independent/assisted living.

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As we looked at an overpriced house this week :), I asked our realtor about Zillow “Zestimates” - she said to take with a grain of salt. One house in the neighborhood that is prime could see for a high price and bring everyone’s Zestimate up. By the same token if one house in the neighborhood is outdated and goes up for quick auction and is sold low EVERYONE’s Zestimate goes down. If you look at the graphs you can see the very quick and frequent zigzagging - at least here!

We are looking for a new home and not really looking to downsize but don’t have a huge house now. Our home now is about 2000 sq feet. As I’ve said before, to me it’s more about # /type of rooms, not square footage. H thought the house we looked at was too big - it was about 2600 sq feet. But a fair portion of that space was in a very large family room and primary room addition. It actually had one less bedroom than ours, no sunporch, etc. And less storage options. I actually wished it had one more “lounging” space.

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Low inventory due to people rethinking their next move and builders not starting many new projects due to materials shortages and high prices is what is most likely responsible for prices steadying instead of falling precipitously.


Mine will be buying soon, I’m hoping prices will drop in the Bay Area. But I bought my first house at nearly 10%, 6% is what I consider very good mortgage rate.
When I bought my house I thought it would never go lower than 3.5%, then it went down to 2.25%, I couldn’t believe it, luckily we were able to refinance with that rate.

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Our neighbors are about to list next month so we have been following what’s happening in our 'hood and nearby listings quite closely.

The fever seems to have broken, meaning that the prices are not rising at such a ridiculous rate anymore, but I don’t think this is indicative of either having been in a bubble or one about to burst. Houses are still selling for 8x what we paid for ours rather than 9x or 10x, like they were last year.

What is “helping” our area is not just employee relocations but HQ relocations. It’s not just random tech bros; it’s all the supporting players moving here, too – HR, mid- and top-level managers. I feel well-positioned for now, though our property taxes are really high. And old-timers like us are having to move because they can’t afford them. People who sold a year ago got top dollar because of the scarcity – literally one listing in our entire subdivision at a time – but right now there are five listings as people bail or others came in and flipped. That’s one reason things have cooled a bit – the supply is catching up to the demand here. My neighbor’s biggest concern is the rising interest rates.


Cash offers are so much more common now. I honestly don’t know and our realtor agreed - how so many people seem to be coming up with the cash! First timers or otherwise - because most bidders who are current house owners have not sold their current home yet.

On my mom’s house that we closed on Monday - just a clean, gently used 1600 square foot 2001 home with all original floors, cabinets, etc. - received 10 offers “best and highest” in about 36 hours. 4/10 were cash offers and above asking. The one with “no inspection” and paying 1/2 half taxes due this month won out. Closed exactly 2 weeks from the day it was listed. Downsizers.


There are some startups that would lend you cash for a cash offer (or make a cash offer on you behalf) until your bank financing comes through. Of course, they make $$$ off this.

I agree that Zillow isn’t always to be believed, but I will say that recent sales activity and volume of activity are important factors to the “correction” of Zestimates in a neighborhood.

Lack of activity or volume of sales will produce poor results or value estimates, especially in a non-homongeneous neighborhood versus a homongeneous neighborhood like a newer housing development of say 50-100-200 +/- homes.

The Zestimates are especially bad in older neighborhoods where the houses are being razed due to the land value having increased and the homes having reached functional obsolescence and are being torn down.

However, having said that, I will use Zillow at a more macro level looking at much broader trends, over 6-12 months, not the week-to-week or month-to-month results. Also, looking at values nearby and how they relate, if at all, to each other.

One neighbrohood that I’m familiar with has had recent sales of both 2bed/1bath (1,000 SF) needing some remodeling and a 3bed/2bath (1,500 SF) remodeled home that are about 1/2 block from each other. So same location. I went through both houses. Zillow has the value of the unremodeled 2/1 just a tad higher than the 3/2, which if you saw the houses, makes zero sense. But that’s Zillow.


Yeah, my neighbor is obsessed with comparing Zestimates. Fun game, but I put almost no stock in them.

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I’m advising a newlywed couple buy a home, but I’m not their realtor. They have one of those too. :grinning:

Anyway, they’ve run into about the same thing here. Roughly 50% of the offers are all cash and at least some of the offers have 3-10+ day closes. Where do they get the cash? Exercising or exercised stock options in their Silicon Valley companies. Also, their families often can help too.

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I’m not doing it for fun. And it’s only ONE data point. You can always purchase market research from RE-oriented data firms and/or brokerages also to supplement publicly available data.

Sure families might help. But also Northern Ohio/Southeastern Michigan blue collar towns are not Silicon Valley influenced! :slight_smile:


There are institutional investors (REITs of sorts) buying up single family houses and then slumlording them.

ETA: In some areas, it is 20% of all inventory (and I bet older, more affordable homes are a target because they can be rented out profitably).

The young tech workers keep telling me at the gym that they could work ANYWHERE now. :grinning:


Yup. Or they hope they could in the foreseeable future.

I monitor sales in the area we want to move to and also where we live for comps. I also noticed a slow down in pending offers. Used to be within 1 week, now maybe 2 or more. Some houses are reduced after the first week of showings. Either they were overpriced or foot traffic slowed down.

I don’t look at Zillows. The recent sales are your best gauge of this overheated market.

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Here in San Diego things have slowed a bit too. Our townhome community is still in very high demand with no inventory and our place would still go for 9 times what we paid for it even today.

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@BunsenBurner my coworker used a service that put up the cash for him and his wife to buy their home. They had missed out on several places to cash buyers and decided the extra $50K was worth it. Their problem now is that they haven’t sold their condo yet so they are making 2 payments each month. They really wanted to get into a single family home, but the one they purchased was $1.8 million for a place that is only 400 square feet larger than the condo they have with a tiny yard. The market here in coastal San Diego is just crazy.

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Mortgage interest rates were roughly 2.75% +/- (ish) in December 2021 and they’re about 4.75% +/- (ish) now, so it’s not surprising the RE market has taken a “breather.” And the Federal Reserve is expected to increase their rates more in the near future.

So, for those looking for something to buy, if you can hold out longer, then you’ll likely get a better deal later this year or next.


That’s what my neighbors are hoping to do. They are changing cities/states as well, but where they are moving is popular, too.