The Wall Street Journal has a detailed report on the myths and pitfalls of downsizing. Among the reasons that people may regret the move to a smaller home:
-Selling your existing home might not provide the windfall you expect. If you don’t have a large amount of equity on your home, the difference between the sale price and the purchase price of your new property may not be enough to merit the move — especially when you factor in all the related costs like realtors, closing costs, storage and moving.
-A smaller house doesn’t necessarily mean a thriftier lifestyle. You will still have to feed yourself, buy gas, clothes, and pay for other monthly expenses (cable, Internet, phone); most, if not all, of which won’t change just because you have one bedroom instead of three or four.
-You can still spend big money on a small house. Yes, that one-bedroom condo might be cheaper and less of a hassle to clean than the house you’ve spent the last decade in, but those savings can go out the window when you spend $30,000 ripping out the kitchen and putting in new floors.
Basically, it comes down to this: True downsizing isn’t just about square-footage. It’s about downsizing your entire lifestyle.