Size Matters

Key Takeaways:

• You can save considerable cash by downsizing. 
• Like all things real estate, how much comes down to location, location, location. 
• Surprise, surprise: You can save most in the SF Bay Area, with significant savings in other major metros. 

Nationally, homeowners can save an average of roughly $196,000 by downsizing from a four- to two-bedroom home. 

As is often the case for all things housing, the San Francisco Bay Area takes the cake: 

Source: StorageCafe

• Downsizing from four to two bedrooms in San Jose (part of the Bay Area) can save homebuyers an average of $777,426. 
• In San Francisco, it’s an almost as impressive $563,113. 

The calculation considered the price difference between the larger and smaller properties, property tax savings over 10 years, and buying/selling closing costs for the transactions. 

Source: StorageCafe

While the aforementioned migration from city/suburb to small town/rural area prevailed in 2022, historically, the more typical moves are from city to suburb, more to less expensive city, and more to less expensive suburb. 

Back in the day, we all knew somebody who moved from Manhattan to Brooklyn or San Francisco to Oakland so they could buy a home. With these secondary cities becoming expensive over the years, this trajectory might not be as much of a thing, but it can still generate meaningful savings. 

• Sliding across the Bay Bridge from SF to Oakland can save, on average, a whopping $1.36 million. 
• From New York City (all five boroughs) to Jersey City, a not nearly as hot $163,000. 
• From Jersey City to Newark, $310,000. 

Super eye-opening numbers from Manhattan in a second. 

But first, a look at typical trajectories in another hot market – the Dallas-Fort Worth metroplex:

Source: StorageCafe

Amazing. 

But sometimes it makes sense to maintain the status quo. 

For example, you’ll save the least – $98,000 – opting for a two-bedroom home over a four-bedroom one in Rochester, New York. 

Similar story in Ogden, Utah, and Tucson, Arizona, which both come in at $99,000. 

The Bottom Line: Earlier this year, The Juice highlighted the cost difference between two adjacent Buffalo, New York, neighborhoods – Elmwood Village and Grant Ferry. So we’re feeling sort of vindicated looking at today’s data. 

Here’s the key: To save, you don’t always have to downsize to an entirely different setting. Maybe you love city living and don’t want to go suburban, small town, or rural. If so, consider neighborhood-level variations. 

For example, check out the incredible savings for moves within Manhattan: 

• Moving from a four- to two-bedroom in the West Village can save you an average of $4.5 million. 
• Cut your living space in half in the Flatiron District and you can save about $4 million. 

Sometimes we overreact to the scary headlines. But you don’t have to leave your preferred locale to save a buck. 

You might be able to make a quick cross-neighborhood or crosstown move rather than one that takes you into an entirely different setting. 

In future installments of The Juice, we’ll highlight more examples across U.S. cities.

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