Retirees living on a tight budget can find a lot of financial breathing room if they are willing to downsize. And in some cities, they could put hundreds of thousands of dollars into their pockets.
In fact, retirees and others who live in the California metropolitan area that includes San Francisco, Oakland and Berkeley can save a whopping $406,600 simply by downsizing from a four-bedroom home to a two-bedroom home, according to number-crunching by StorageCafe, a nationwide storage space marketplace. And within one particular city, they can save upwards of $535,000.
In addition to the savings they can gather from selling a more expensive home and buying a smaller and cheaper abode, downsizers also can save on property taxes (which StorageCafe calculated for a 10-year period) and on both selling and buying closing costs for each property.
StorageCafe’s analysis of the San Francisco area clearly illustrates how much moving from a bigger home to a smaller home can save a typical homeowner:
“The value of a 4-bedroom in the San Francisco metro stands at almost $1.6 million, while a 2-bedroom home stands at around $1M, resulting in a difference of about $530,000. The property tax difference between the two types of home totals over $28,000 for a 10-year period.’
While closing costs bring the savings down a bit, downsizing homeowners in this area still can save more than $400,000. And savings are even greater inside San Francisco itself, ringing up at no less than $535,000.
The savings can grow to a king’s ransom if you’re willing to be a bit more adventurous: Move from San Francisco to neighboring Oakland and you can save nearly $1.2 million.
For its analysis, StorageCafe looked at the 20 most populous U.S. metro areas to better understand how much money downsizing can save.
Here are the 10 areas where downsizing from a four-bedroom home to a two-bedroom home saves you the most in terms of home value, property taxes and closing costs:
- San Francisco-Oakland-Berkeley, CA: $406,600
- San Diego-Chula Vista-Carlsbad, CA: $264,700
- Los Angeles-Long Beach-Anaheim, CA: $239,800
- Seattle-Tacoma-Bellevue, WA: $234,500
- Miami-Fort Lauderdale-Pompano Beach, FL: $233,700
- Boston-Cambridge-Newton, MA-NH: $232,900
- New York-Newark-Jersey City, NY-NJ-PA: $215,400
- Detroit-Warren-Dearborn, MI: $209,800
- Washington-Arlington-Alexandria, DC-VA-MD-WV: $209,600
- Philadelphia-Camden-Wilmington, PA-NJ-DE-MD: $194,000
StorageCafe notes that downsizing can pay particularly big dividends to empty nesters, retirees and those who don’t need a lot of space at this point in their lives.
Alas, many homeowners of all ages are simply too frightened to buy a home right now. For more on why, check out “10 Things Preventing People From Buying a Home Today.”
If you are among the more courageous souls ready to find new digs, stop by Money Talks news’ Solutions Center and search for a great mortgage rate.