For the past several years, I have been warning Pre-Retirees to be aware that the age-old idea of selling their large house, downsizing into something smaller or a condo, might not give their Retirement Nest Egg as much as they might be expecting. In essence, a glut of large houses, and increased demand for smaller ones, would throw the economics concept of Supply and Demand out of whack.
Mary Umberger, of Tribune Newspapers, recently wrote the linked article, http://articles.chicagotribune.com/2013-04-01/classified/sc-cons-0328-umberger-20130329_1_boomers-housing-market-homes. It summarizes the research that Arthur C. Nelson, Professor of Urban Planning at the University of Utah has done on the topic. Besides the economics, other factors come into play, as well.
Several of the factors that will be working against tapping the equity in the large house are as follows: the demographic group following the Baby Boomers will be smaller and not looking for as many larger houses; the houses from the Retirees will not necessarily be where today’s jobs are; there appears to be more of a demand for rental housing; and, also, with the weaker Economy today, the affordability will favor more economical housing. And, don’t forget that there is somewhat of a shift to housing that is closer-in to cities, where the jobs, shopping, sport and entertainment venues are–as well as greater use of Mass Transit.
So, if you are in the Boomer mix, you might want to consider downsizing earlier and being ahead of the curve, rather than behind it.