3 Good Reasons Not to Downsize Your Home

It's not always the right decision.

If you've been thinking of downsizing, you may have been told that now is a great time to do it. By downsizing your home, you can slash your housing costs and free up money for other expenses or goals.

Plus, right now, home prices are way up on a national level, so if you downsize, you might command a nice dollar amount for your property. In fact, you might walk away with so much cash that you can buy your next home outright without having to take out a mortgage.

But while downsizing could be a good solution for you, it may not be an ideal one just yet. Here are a few reasons why you shouldn't rush to shrink your living space.

1. Your plans aren't certain

You may be thinking of downsizing and moving to a new neighborhood, or even a new city. But if your plans aren't concrete -- say, you don't have a job you can take with you to a new part of the country -- then you may want to hold off on downsizing and stay in your current home until you've worked things out. This especially makes sense if you have children at home, because the last thing you'd want to do is uproot them prematurely.

2. Your nest hasn't been empty for all that long

It's common for people to downsize once their kids become adults and move out. But if your adult kids only recently moved out, you may want to hold onto your home a little longer -- especially if your children aren't yet settled in their careers.

Say your youngest moved out six months ago and has been working at a job they hate. That child might realize they need to go to graduate school to pursue a better career. And in that case, your child might ask to move back home while they take classes and go without an income for a period of time. That's a harder request to accommodate once you've already unloaded a larger home and are living in a smaller one without a spare bedroom.

3. You can monetize your home

A lot of people are motivated to downsize for the savings involved. But before you rush to put your home on the market, consider another way to improve your financial picture -- retaining your larger home and renting a portion of it out.

If you like living in your home, have great neighbors, and love the various amenities you can access on foot, then you may not want to move to a new home, even within the same area. But if you can get enough money by renting out a finished garage or basement, then you might end up in the same financial position as you'd be in by moving to a smaller home.

What's the right call?

It's easy to see why the idea of downsizing is tempting -- especially right now, with home prices being up and buyer demand being strong. But before you make that decision, it pays to consider the upside of staying where you are -- at least for a little while longer.