Our Decision To Downsize - How and Why We Decided A Smaller Home Was Better For Our Family
It’s a hot topic that I’ve discussed with many of you in my direct messages on Instagram but I’ve never mentioned it on the blog. So today I’m explaining our entire process behind deciding to move from a large suburban home into a smaller urban house and what that means for our future quality of life.
I’ll be honest - this decision isn’t perfect for everyone and we don’t even know the outcome yet. So I can’t tell you that you should sell all your belongings and live in a loft apartment. What I will tell you is that I’ve lived small before and that I’m ready to do it again.
We see so many benefits to this decision - I’ll outline them all here - that they outweigh all of the fears and downsides we’ve noted. But I’m going to explore everything; the pros and the cons we know we’re going to experience as we transition to life in a smaller home.
In the coming weeks, I’m going to dive deep to explain how we plan to tackle this downsize. From the financials of the decision to the process of actually eliminating at least 1,000 square feet of belongings, I’ll explore it all. So let’s get started with the why and the money!
Our Dream Home, circa 2017
Since I’m not sure I’ve ever discussed this in great detail, let’s first talk about our current living situation. Our current home, built in 1997, is just under 3,000 square feet and features 4 bedrooms, 3 bathrooms, a formal dining room, formal living room, study, grand foyer, bonus room, laundry room, eat-in kitchen, and a 2-car garage. It sits on .2 acre in a typical suburban tract neighborhood just west of downtown Nashville, in a section of town called Bellevue. The school district ranks among the top in the county and our subdivision amenities include a community pool and clubhouse.
We purchased this home for $350,000 in 2017, after having lived for two and a half years in Western North Carolina. Our decision to move back to Tennessee was entirely personal. While we were in NC, we had a daughter and wanted to live closer to family. I grew up in this community and my family still lives within 10 minutes of our neighborhood. After having lived so far away from family for the first two years of our daughter’s life, we were ready to enjoy the perks of having childcare and an emergency back-up within just a few short miles.
We also bought this home because, at the time, we had plans to have more children. Our daughter was just under two years old, so we were still relatively new parents. At the time (probably because we were so far from familial resources), parenting felt like a sinking ship. Still, we’d always assumed that once she was older, we’d end up wanting more kids. We weren’t sure how many but we wanted to make sure there would be room in our forever home for all of them.
That’s right. I said it. This was meant to be our forever home. So what happened?
How Our Dream Home Became Not Our Dream Home
I could be very dramatic here and call this section “How Our Dream Home Became Our Nightmare” but the reality is that this house isn’t a nightmare. It’s a sturdy, beautiful home in a gorgeous neighborhood with sweet families and wonderful access to parks, restaurants, and weekend activities. So I’m not going to lie about it.
This home is someone else’s dream home. A family will move in here and be very happy. Just because it’s not right for my family doesn’t mean it’s wrong for every family. If you get no other takeaway from this post, I at least want you to understand this:
What you do for your family should be a personal decision that you base entirely on your actual family.
Do not let other people, trends, or even this blog post persuade you to make a decision. Don’t accept that you must change your lifestyle or where you live just because you’ve had kids. Every single family is different. Every person is different. Don’t give into the trope that you must live “The ________ Life” just because your life has changed in some way.
Why am I so passionate about this? Because, my friends, that’s how we ended up living in a “dream home” that turned out not to be our dream.
As it turns out, Christine and I don’t want to have any more children. We’ve thought about it. We’ve talked about it. It’s been three years of back-and-forth. We felt like we should have more kids because everyone tells us kids are better in packs or pairs. We love our daughter, so we know we’d love any other kids too. We both love our own siblings and want that same scenario for our daughter. But, at the end of the day, we just don’t want any more kids. Wanting children is entirely personal. For us, we’ve hit our stride and are very happy with the way our family functions as a trio.
So a four bedroom house is kind of overkill. Like, two bedrooms and an entire living space of overkill. We could, in essence, live without this entire wing of our upstairs and be perfectly happy. Isn’t that crazy?! Even crazier? I’m cleaning this space all the time. We’re heating it and cooling it and dusting it and vacuuming it and then paying for the square footage in our annual taxes and mortgage. Not to mention the cost of renovating/decorating it.
And it’s not just wasted space. It’s unwanted space. In addition to the annoyance of having to clean and maintain sections of our home that we don’t really need, we’re also annoyed by how the house has divided us as a family. Because of the duplicated living spaces, we’ve found ourselves being segregated at home.
After dinner each evening, our daughter wants to go upstairs and watch TV in the bonus room. Meanwhile, we are tidying the kitchen and readying the house for the next day, downstairs. Weekends are pretty similar. We have chores and tasks to complete on the first floor and she wants to be upstairs in her bedroom or in the bonus room. We are all very rarely on the same floor.
We’ve discovered that a large home doesn’t necessarily equate to a family-friendly home.
When we entertain, the kids all want to be upstairs and the parents flock to the kitchen and dining room. While I don’t mind this, there are some safety issues. For instance, our daughter is pretty accustomed to navigating these stairs but other kids her age have trouble. We don’t have safety gates installed (thanks to a terrifying incident with a 3 year-old climber). So that means one of the parents always has to be upstairs, secluded from the party. Or, most often, we break off into shifts with the men hovering around the food downstairs and the women upstairs, far from drink and food refills. It’s just not a convenient way to host other families. It would be far more convenient if, rather than a second story, our child could just entertain her friends in her bedroom on the first floor. We wouldn’t have to hover over them all the time.
Now I know you’re thinking Yeah but she’s going to be a teenager one day. Totally. Christine and I were actually both teenagers and we didn’t have entire floors dedicated to entertaining our friends. That’s something she can have when she moves out and pays the mortgage. Which brings me to my next topic: Money.
Downsizing: A Euphemism For Cutting Costs?
For the most part, I always assumed that when people were discussing downsizing homes, they were doing it to save money. Sure, they had a list of reasons, just like we do, and they all made perfect sense. But at the end of the day, my assumption was still that they wanted to cut back on their mortgage and household bills. Since I left my corporate job last July to start my full-time design business, that’s probably your assumption too. After all, cutting costs when your income is divided in half is a pretty smart move, right?
I wish I could tell you that this move is a smart financial decision we’re making for our family, in order to boost our savings, grow our wealth, and set aside more for our daughter’s future. The truth, though, is it’s probably not going to give us any immediate cost benefits. Here’s why: Our current home cost us $350,000 in 2017. Our down payment was 20% and we have made slightly more than our minimum payments each month (applying all the extra to principal), leaving us with a mortgage of roughly $269,000. Based on the comparable homes in our current market, (you can get the free guide for determining your comps here), we’re looking at a sales price of roughly $400,000. That’s a $50k return in 2 years, which sounds great, right?!
Courtesy of RealTracs, here’s a screenshot of current listings in our neighborhood, by sales price:
Well, we’ve also invested a lot of money into this home. Remember, for a while we were under the assumption that this was our forever home. So we updated a lot of the systems. After systems updates and other miscellaneous improvements, we’ve invested an additional $15k into the house, which cuts into our profit margin. Then we also have to consider roughly 8% of the sales price to cover closing costs and we’re basically at $0.
Telling you guys this is hard for me. I take so much pride in the fact that I’ve made smart real estate investments that have furthered my family’s goals. It’s really hard to admit that I’ve sunk a lot of our previous earnings into a home that isn’t going to provide much return. Sure, we’re going to walk away with some cash in hand, but we still haven’t really made anything because the biggest bulk of that cash is just the down payment we put in when we purchased.
Here’s the calculation -
CURRENT HOME INVESTMENT: $350k purchase price + $15k improvements + $32k closing costs = $397k total investment
EXPECTED SALES PRICE: $400k - $397k = $3k profit
CASH IN HAND EQUATION: $400k expected sales price - $32k closing costs - $269k mortgage pay-off = $99k cash in hand
So if we were simply trying to downsize to save money, the smartest thing for us to do at this point would be to buy a home with a smaller sales price, or overall investment cost. So that means we should be looking for a home priced below $350k.
But saving money isn’t our goal for downsizing.
The biggest reason we have chosen to downsize is for the overall quality of our family’s life. Our home is nice and our neighbors are charming, but they simply can’t compete with our desire to be back in our old Nashville neighborhood.
Before we moved to NC, we’d both lived for a long time in a part of town called East Nashville. Wanna take a guess at its location? East Nashville is a large community with lots of smaller neighborhoods built within its borders, but we specifically want to take advantage of the walkability and neighborhood amenities, like local shops, dining, parks, niche schools, etc, so we’re looking at a very small section of this community. Because this section offers so many great opportunities for life outside the home, it’s also incredibly desirable and very competitive. That market is HARD to crack and it can be incredibly expensive.
For comparison’s sake, here’s a screenshot, like the one above from RealTracs, of the current listings within the neighborhood we’d like to buy -
Those smaller numbers are all condos and we’re really looking for a single family home (for reasons I’ll explain momentarily), so you can see that we’re actually not going to find anything listed below our current mortgage. In fact, we’re likely to spend more money to live in a smaller home.
WHY WOULD WE SPEND MORE MONEY FOR A SMALLER HOME?
If you remember your high school Economics class, you probably remember the term trade-off. Trade-off or opportunity cost refers to the sacrifice required in order to receive something of a greater benefit. Put simply, we’re willing to spend more money (the sacrifice) for the lifestyle opportunities (the benefit) this neighborhood offers.
This is why I’ll be preaching that you must fully evaluate and understand your family before you make major investments from here on out. Two years ago, we assumed that, because we were building a family, we had to assimilate to the family culture. For us, this meant we should move to the suburbs and shop at chain stores, eat all our meals at home or “family-friendly” restaurants, join an HOA, and spend our weekends mowing the lawn.
And we really did give it the old college try! We tried to make friends with our neighbors! They’re nice! But they’re also incredibly busy, as parents with multiple children tend to be. We found good, local restaurants we loved and one by one, they went out of business. We even made a community out of our daughter’s daycare providers only to be repeatedly disappointed when each teacher quit after just a few short months.
Then, as our daughter grew, we found ourselves flocking back to our old neighborhood more and more. First, it was the occasional date night. Christine and I would drive half an hour across town to have dinner at a local upscale restaurant and drinks at a local bar (cocktails for me, Coke for my designated driver/wife). Then we’d drive back home - another 30 minutes - around 11:00, both weary-eyed, and immediately collapse into bed as soon as we crossed the threshold.
Then we started taking weekend excisions with our daughter to the science museum, the big local parks with the good playgrounds, and the children’s theater - all of which are much closer to East Nashville than our neighborhood. So naturally, we’d head over to our favorite Mexican restaurant (Rosepepper, for you locals) or bakery (Marché). Before we knew it, we’d spent the entire day in East Nashville and our daughter was exhausted, cranky, and fell asleep during the half-hour drive back home. Put that on repeat, every weekend, for a few months and you’d understand why we’re so passionate about moving back there.
It’s hard to explain how one neighborhood can feel so completely “us” while another feels so completely “not us” but that’s exactly where we’re at. It’s where we’ve been for the majority of the two years we’ve owned this home and it’s not getting any better. Even as new families move in and we make new friends, we’re still longing to be across the river.
Sometimes “home” has nothing to do with the house. That’s where we find ourselves these days - we’re homesick when we aren’t in East Nashville.
DOWNSIZING TO A MORE EXPENSIVE HOME: HOW WE’RE HOPING TO OFFSET THE FINANCIAL STRAIN
While I’m not impressed by the lack of income we’re going to generate when we sell this home, I am going to admit to one thing we did right.
Two years ago, we couldn’t have afforded a home in the neighborhood we’re searching in today. At the time, the real estate market in that area was too hot to touch while the market in our current neighborhood was just starting to rebuild after a bit of a slump. Having some slight reservations about living in the suburbs (listen to your gut, people), Christine and I only came to an agreement to buy here because I outlined my suspicions about the growth of these two markets. My predictions? I anticipated that our current suburb would continue to climb in resale value while the market we’re now hoping to tap would plateau. That’s what I got right!
While the market we’re diving into hasn’t decreased in cost, it has basically leveled off with the cost of our current market. Plus, there’s consider the fact that we will recoup our entire investment in this home when we sell - which means we’ll have lived rent-free for the past two years. Waiting it out in a rental would have been money thrown away. See? It’s almost always smarter to invest somewhere, even if it’s not your ideal location, instead of paying your landlord’s bills.
We’re also looking for a very specific type of property in the new neighborhood. I’m pretty sure my realtor thought I was insane when I told him we don’t even care about the size or look of the next house. Our priorities this time around? 1. Location - this is our top priority, for reasons outlined above, and 2. Lot Size / Zoning.
We’re looking for a lot that is narrow and backs up to an alley. Luckily, most of the homes in this neighborhood, being especially older, fit this criteria. Why do we want it narrow? We want a backyard that is big enough for us to build a garage, accessible from an alley, over which we can build a small apartment / studio. The apartment would replace our current guest rooms but would also allow us to generate income while it’s not in use by our family (via short-term rentals, which are hot in this part of town). The studio would replace my current office, but provide me with a place to work that is technically outside the home, so I can “put it away” at the end of the day.
Final Thoughts On Our Downsizing Trade-Off
That photo above was snapped last Summer at our favorite bakery. That’s the day we taught our daughter how to butter her own bread. She colored before our meal arrived, I sipped Champagne and Christine and I laughed and connected with one another in a way we just can’t in a chain restaurant, full of televisions. Last week, we were at that bakery again - this time just for dessert - and Christine showed our daughter how to place her napkin in her lap while she eats. Afterwards, we took a long walk around the neighborhood, diving in and out of shops and talking to everyone we met. I bought some artwork and made friends with another small business owner while our daughters played together.
I’ve been spending a lot of time looking through my cell phone’s photos lately. While picking and choosing which ones can be deleted and which ones get to stay, I’ve noticed a common theme: The photos I take most often aren’t of my home. They’re not of the projects I build or the lawn I’ve just mowed. My family isn’t connecting in this house. The photos that represent the real moments we are coming together as a family are all from the times we aren’t even in our home.
Our home is filled with love and happiness because we are in it together but that would be true of any home, anywhere. The real goal when we buy our next house is to focus less on the house and more on the life we could have if we lived in that house. Since that’s what my iCloud photos are telling me I care most about anyway.
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