A New Chapter: The Growing Trend of Senior Downsizing

For many Americans, the retirement years are a time for reevaluation, and for a growing number, this includes a fundamental change in their living situation. While aging in place remains a common desire, a significant portion of the senior population is actively considering or planning to downsize. A recent AARP survey found that while a majority of adults aged 50 and older want to remain in their homes, a notable 44% expect to relocate at some point¹ and are considering smaller, more manageable living arrangements. This trend is driven by a desire for simplicity, reduced costs, and a lifestyle that better fits their new phase of life.

The Driving Factors Behind the Move

The decision to downsize is rarely based on a single factor. Instead, it is a multi-faceted choice influenced by lifestyle, finances, and personal circumstances.

• Simplicity and Reduced Maintenance. A large home comes with a lot of responsibility—cleaning, yard work, and costly repairs. By downsizing to a smaller property, seniors can dramatically reduce the time and expense associated with home upkeep. This shift allows them to focus on hobbies, travel, and spending time with loved ones, rather than being a “man with 1,000 cows” who must constantly care for their property.
• Lowering the Cost of Living. For those on a fixed income, a smaller home often means a lower overall cost of living. This includes a reduction in property taxes, insurance premiums, and utility bills. A 2024 AARP report found that the cost of living is a main driver for older adults looking for a new community, with 65% of those aged 50 and older saying they would move for a lower cost of living².
• Proximity to Family. Family is a powerful motivator. As adult children settle down and have their own families, many seniors choose to move closer to them. This makes it easier to be an active part of their grandchildren’s lives and to receive or provide support as needed.
• Finding a Home That Better Suits Their Needs. The home that was perfect for raising a family may not be suitable for aging. Many seniors are looking for homes with features like single-floor living, no-step entryways, and wider hallways that are more accessible and safer. A 2024 AARP survey noted that a key reason for a planned move is to find housing with accessibility features¹.
• Better Weather and Lifestyle. For many, retirement is an opportunity to escape harsh winters and embrace a warmer climate. A change in location allows for year-round outdoor activities and a new social environment.

The Power of the Reverse Mortgage for Purchase

For seniors looking to downsize, a Home Equity Conversion Mortgage (HECM) for Purchase is a powerful financial tool that can provide a significant advantage over a simple cash purchase. This FHA-insured loan allows a person aged 62 or older to buy a new home by combining a down payment with a reverse mortgage, eliminating the need for monthly mortgage payments.

Why an HECM for Purchase is Often Better Than Paying Cash

While using the cash from your old home’s sale to buy a new one outright seems straightforward, it comes with a major trade-off: it can deplete your liquid assets. An HECM for Purchase offers a compelling alternative.

1. Preserves Your Cash Reserves: The most significant benefit is that it allows you to preserve a large portion of the cash from the sale of your previous home. Instead of using all the proceeds for the new home, you use only the required down payment (often between 45% and 55% of the purchase price), and the reverse mortgage covers the rest³. This preserved cash can then be used to create a financial safety net for unexpected medical costs, travel, or to simply enhance your retirement lifestyle.
2. Eliminates Monthly Mortgage Payments: Unlike a traditional mortgage, a reverse mortgage requires no monthly principal or interest payments as long as you live in the home, pay property taxes and insurance, and maintain the property⁴. For seniors on a fixed income, this can dramatically improve monthly cash flow and financial flexibility, freeing up thousands of dollars a year that would have gone to a mortgage.
3. Increases Your Purchasing Power: For some, the proceeds from their old home’s sale may not be enough to buy a new home that meets all their needs in a desirable location. An HECM for Purchase allows you to leverage your home’s equity to buy a more expensive home than you could with cash alone.
4. Non-Recourse Protection: A HECM for Purchase is a non-recourse loan, meaning that you or your heirs will never owe more than the home is worth at the time the loan is repaid³. This provides peace of mind, protecting your estate from a potential decline in the housing market.

By understanding the key drivers for senior downsizing and the financial advantages of an HECM for Purchase, you can make a more informed decision about your next home and retirement chapter.

Footnotes

1. AARP, “2024 Home and Community Preferences Survey: Where We Live, Where We Age.”
2. AARP, “Older Adults Want to Age-in-Place, But Many Don’t Expect They’ll Be Able to.”
3. Federal Housing Administration (FHA), “Reverse Mortgages for Seniors.”
4. Consumer Financial Protection Bureau (CFPB), “Reverse Mortgages.”