Consider these pros and cons before moving to a smaller home in today’s market.

Downsizing to a smaller home, condominium or apartment shortly before or in retirement can reduce your housing costs, free up cash and lessen the burden of home maintenance.

But many older adults aren’t eager to move. Nearly one in three boomers who own their homes say they’ll never sell, according to a May 2026 survey by real estate company Redfin and 33 percent of silent generation homeowners don’t even plan to sell.

One reason homeowners aren’t moving is because they don’t feel financially motivated to do so. They don’t have a mortgage payment hanging over their heads. Nearly 60 percent of boomers who own a home have paid off their mortgage. With 30-year mortgage rates hovering near 7 percent and the median existing home sale price hitting $429,100 in August, staying put might seem like the financially savvy choice.

However, several signs indicate that today’s real estate market may offer a great opportunity for some older homeowners to trade in a larger home for a smaller abode.

If you’ve paid off most or all of your mortgage, downsizing now could free up cash at a time when home equity levels are at a record high. The average homeowner has $212,000 in potential equity.

Downsizing in this market can also mitigate other rising costs of homeownership, such as homeowners insurance, property taxes and maintenance. Wondering whether now is the right time to downsize? Consider these benefits and drawbacks before making a decision.

Pro: It’s not a bad time to buy. After several years of housing shortages and soaring home prices, buyers are gaining the upper hand. The supply of homes for sale is at its highest level since 2020, and nearly 60 percent of homes sold below their original asking price in August, according to Redfin. It’s especially a buyer’s market for condominiums in popular retirement destinations such as Arizona, Florida and Texas. 

Pro: It’s not a bad time to sell either. Home values in many cities have risen so fast over the past five years that you may have enough equity to sell your home and buy a smaller place with cash, eliminating the need for a mortgage. No mortgage means improved and more reliable cash flow for those on a fixed income. It also provides the freedom to engage in hobbies, travel and pursue other retirement interests. Also, if you choose to rent rather than buy, you get the added benefit of having a management company maintain your property, giving you back more time and money.

Another reason now could be a good time to put your house on the market? Homes are still selling relatively fast — properties that sold in August were on the market for 60 days on average, the same number of days as the year before. If you decide to rent instead of buy, you could slash your insurance premium by thousands of dollars - the average cost of renters insurance is just $151 per year, compared with an average of $2,395 per year for homeowners insurance.

Pro: You could reduce your property taxes. Your property tax bill has likely risen over the past few years. Median property taxes in the U.S. increased three percent from 2024 to 2025, reaching $4,427, according to Realtor.com. Moving to a lower-priced home or condo could cut your tax bill significantly.

Pro: You could save on maintenance costs. Maintaining a larger home becomes more difficult as we age and with home maintenance costs on the rise, moving to a smaller place might result in significant savings.

Con: You could get hit with a hefty capital gains tax. If your home’s value has soared since you purchased it, you might face a big capital gains tax bill when you sell. Home sale profits above $250,000 for single filers and $500,000 for married couples filing jointly are taxed at a 15 to 20 percent capital gains rate, depending on your taxable income.

Con: Downsizing could be more expensive, depending on where you want to live. A lot of people don’t downsize to save money. Instead, some move to 55-plus active-living communities for the amenities they offer, such as pools, pickleball courts or fitness centers. These services typically come with larger condo fees, etc. 

Con: Condos typically don’t appreciate as much as single-family homes. If you’re considering downsizing to a condo, be aware that it might not appreciate as much as your single-family home would. If you’re worried how much it will be worth when you eventually pass it on, then that might be something to consider. However, downsizing could be a way for you to give your kids their inheritance early by sharing the profit from the sale of your home.

So, this should give you some things to ponder as you navigate your next move. Check in with a member of The Marzeotti Group with additional questions or a trusted real estate professional. W