The Surprising Impact of Downsizing

Photo by Aysegul Yahsi on Unsplash

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My wife and I have downsized. We sold a large condo in a high-rise building and are moving to a much smaller house in a nearby community.

The process taught me a lot about financial planning.

Clueless... in retrospect

We had lived in the same condo for the past 22 years. We bought when it was brand new.

It was in a beautiful, gated community, with extensive facilities that included three golf courses. Neither my wife nor I are golfers.

Before moving in, I didn’t consider the increasing costs we would be assessed to maintain facilities we didn’t use.

I also didn’t appreciate what happens with assessments in residential buildings as they age, although, in retrospect, it should have been obvious.

There’s evidence maintenance costs increase substantially over time. Frequently, budgets aren’t adequate to address the need for costly updating and repairs. This means residents may be saddled with significant assessments to cover the shortfall.

Another factor that eluded me was the impact of changing demographics, which was accelerated by the pandemic. It’s not surprising that our building, located in a desirable community near Naples, Florida, would attract a younger demographic with more disposable income and different aspirations for the building than older residents. For many, living and working in a resort-like atmosphere in a temperate climate is very appealing.

As I assessed our situation, I perceived a future dominated by significant – and uncertain – increases in costs, over which I had no control.

The final factor that influenced our decision was an overheated real estate market. The number of listings in our community plummeted to an all-time low. It was an excellent time to sell, even though we had no place to go.

It would have been impossible for even the most competent financial planner to anticipate this confluence of events.