“The downside of retirement downsizing in a McMansion world”

Downsizing has its challenges:

Anne Tergesen at The Wall Street Journal explored the problems of moving from a larger home to a smaller home at retirement: “But downsizing isn’t always simple, painless — or even all that beneficial financially. With the real-estate market still fragile, many baby boomers are getting a lot less than they expected for the old homestead. All too often, they have little cash left over after buying a new place, and their monthly expenses don’t fall as much as they thought — or may even rise instead.”

Tergesen also wrote about the emotional pain downsizing might cause: “They can’t bear to sort through or part with all those boxes in the basement, or argue with the adult children who want to keep the house where they grew up. Sometimes they downsize only to find they miss their old lifestyle and stuff.”…

Of course, downsizing doesn’t necessarily mean a scaling back in comfort. Architect Sarah Susanka, author of the best selling “Not So Big House” series of books, writes about how people can live in smaller homes that seem bigger because the design eliminates the wasted space in homes — such as dining rooms and formal living rooms.

Buying and selling homes, though, has its own challenges. Jacob Goldstein with NPR looked at the question of whether homes are cheap right now: “Houses are much cheaper than they were six years ago. Of course, six years ago was the peak of the biggest housing bubble in the history of America. So does ‘much cheaper than they were six years ago’ mean cheap? Does it mean ‘cheaper, but still overpriced’? Or does it mean ‘about right?’ ”

Moving can be difficult. But, downsizing can be viewed as a good thing: it gets people out of unnecessarily large homes that take up too much space in the first space; it could help people get rid of stuff they accumulated over the years (American consumerism at work) as well as begin a lifestyle where they can’t accumulate as much because they have less room to store it (though there could be problems with passing down heirlooms); and it might reduce housing and utility payments.

So, if downsizing is a good thing, can’t someone figure out how to make it easier? How about some sort of company or program that matches people who want a larger house with people who want to downsize? How about communities or perhaps governments that would guarantee people a certain value for their home if they live there a certain amount of time and then leave for downsizing purposes? What if a company promised to buy a downsizer’s home if they purchase an somewhat equally priced new Not So Big House? These ideas might be out there but if we wanted to promote downsizing, there are things companies or governments could do help the process along rather than just leave the process to the twists and turns of the real estate market.

Advantage of a tiny house: you can drive it around and unload it when needed

The tiny house has this advantage over traditional homes: you can put it on a truck and move it when needed.

Sitting on an unsaleable trailer, Kirsten Shaw and her husband decided to do something radical: following a growing trend in the U.S., they eschewed the Calgary-standard McMansion and instead started to build a portable tiny house. Mrs. Shaw, who works in a Calgary health food store, and her husband, a contractor, are constructing their new home paycheque by paycheque. When it’s complete sometime next year, the fort-like dwelling will take up about 200 square feet. Along with a converted van, that’s where the family of three (which swells to six when her husband’s children from a previous marriage join in) plan to live and travel. The Post’s Jen Gerson spoke with Mrs. Shaw in this edited transcript…

It seems like this tiny houses have become more popular, do you think that has anything to do with what you just described, that people aren’t really getting ahead?

It could be for us it’s that I guess I really have taken a good long look at the fact that you’re very much in a relationship with the government that you’re very vulnerable…If there was an oil crisis and the food stopped getting trained in and trucked in here well we can’t really grow things here in Calgary.

It’s more like giving us the security in that we have the power to do what we need to do to survive as a family and always make sure we’re provided for. If that means picking up and driving somewhere where food grows in the southern states or even out on the islands we can do that and not have to worry.

Here is the twist to this downsizing story: the family is worried that they will need to be more mobile in order to respond to changing economic conditions. Owning a home ties you down too much; not only does it require a much larger financial commitment, it takes more time to move since this involves selling the home, finding another place to live, and doing something with all the stuff one can accumulate in an average new home of over 2,000 square feet. This would seem to match up with some commentary that part of the problems with the recent recession is that possible employees can’t easily go to where the jobs are because they are tied down by underwater homes.

Perhaps we could envision a future where more workers have to be mobile, both to cut expenses but also in order to find temporary work…not exactly the typical image of the American (or Canadian) Dream.

The links between money and happiness

There is a lot of research exploring the links between income/having money and happiness. The New York Times discusses some of this research and how the recession might be pushing people to find satisfaction in things other than money.

With those who have cut back in spending or are legitimately downsizing (moving into a smaller home or giving up a car vs. giving up cable for a while), it remains to be seen whether such behavior will continue when economic times are better.