Is This a Good Time to Upsize, Upgrade, or Downsize Your House?


I was recently talking to a friend who is getting close to retirement and wants to downsize. He knows he can sell his current home for much more than he could a year ago, but he’s finding his target house hard to find and more expensive as well. He’s not alone. That’s because we are in the middle of a supercharged real estate market—what some have called a “housing craze.”

Whenever I see the words ”craze” or ”frenzy” used in a sentence to describe a social or economic trend, I get nervous. Why? Because the Bible warns us about making financial decisions fueled by greed (Prov. 15:27, Luke 12:15, Heb. 13:5), a desire to “get rich quick” (Prov. 13:11, Prov. 28:19–22), or acting imprudently—impulsively without wisdom—regarding our financial affairs (Prov. 15:11, Prov. 27:12, Luke 14:28–30).

I’m not suggesting that you shouldn’t buy or sell real estate just because we’re in a hot market. However, if you do, you would do well to heed these biblical warnings.


This market ”craze/frenzy” is mostly due to supply, and demand can be an indicator of what behavioral finance experts describe as the ”fear of missing out,” or FOMO. In the context of the current real estate environment, FOMO may be expressed in thinking that goes something like this:

It seems like everybody is selling their house for more money than they ever imagined. If I don’t sell sooner rather than later, I’ll miss out on this once-in-a-lifetime opportunity. Therefore, I need to put my house on the market now, even if I don’t know what or where I will buy its replacement. Plus, if I can’t find what I want, I can always rent and buy later. And, should the market crash by then, I will have saved a lot of money.

This feels to me a little like the Dot Com boom and bust of the late 1990s–early 2000s. After rising to stratospheric heights, you may recall that the NASDAQ (mostly tech stocks) lost 75 percent of its value. This phenomenon occurred as a result of the growth of access to the World Wide Web in the late 1990s, and many investors started investing in internet-based companies as the future of commerce, which lead to excessive speculation, “fad” investing, and a focus on marketing hype over financial substance.

Admittedly, this doesn’t accurately describe what is going on in the housing market right now, as the dynamics are very different. Housing prices are being bid upward due to low mortgage rates, limited supply, and pent-up demand as the country emerges from the pandemic. It is also unlike the period leading up to the 2007–2008 real estate market crash, largely due to people with low credit scores buying houses they couldn’t afford and investors over-leveraging to buy houses to flip.

But the “FOMO” emotional and behavioral dynamics are similar.

If we carefully dissect the thought process I described above, we can see some problems with it:

  • Not everybody is selling their house. In fact, according to the online real estate service Redfin, at the end of June, active listings were down 33% compared to the same time in 2020, which was lower than 2019. Escalating prices are due to fewer houses for sale, not more.
  • Nationwide, housing prices are up 82% or 6.6% per year (which was a decline of 26%), but inflation-adjusted median home sale prices are only up about 3% a year since they last peaked in 2007. The Case-Shiller National Home Price Index is up 15% year-over-year through the end of April. By now, it’s probably over 20 percent, which is a year-to-year anomaly, primarily due to post-pandemic demand and the other factors I listed above.)
  • If you wait a year from now to sell, the market value of your home may be slightly less (although it could be more). But the house you are going to buy will likely also be. A rising or falling tide floats all boats in real estate with the possible exclusion of select markets.
  • A “once in a lifetime opportunity” means you may never be able to sell your house at the current market price again for as long as you live. But based on historical data, that’s an improbable scenario unless you have an untimely demise. After median home prices hit their peak in 2007, they reached it again in 2015, including massive declines due to the Great Recession of 2008—2010.
  • Putting your house on the market impulsively without a plan for where you will live once it sells (and it may sell quickly) can easily become problematic. You may find yourself ” in-between” houses, and a short-term rental may be much harder to find than you think. If you plan to rent long-term and wait for the market to go down (or “crash”), you may be in for a long wait. (And even if it goes down, it may not go down by much; nobody knows. Trying to time the market is a fool’s errand.)

All that being said, we are certainly in a seller’s market. House prices have been going up since the pandemic, and they may not drop dramatically anytime soon. Demand is high and is likely to remain that way due to years of under-building and the resulting housing shortage. Increasing demand and limited supply mean higher prices. Plus, rents are also rising, making more people consider homeownership to lock in their monthly housing expenses and build equity.

According to a recent economic report from Goldman Sachs, the current ”strong demand for housing looks sustainable. . . [and] the supply picture offers no quick fixes to the shortage of available homes… [thus] the resulting picture is one of a persistent supply-demand imbalance in the years ahead. Their model suggests rising prices and ”projects double-digit price gains both this year and next.”

Because it’s a sellers’ market, it can be very challenging for first-time homebuyers, although low mortgage rates are of some help. For older home buyers, including those nearing or already in retirement, it’s a mixed bag. Let’s look closer at the situation based on older homeowners’ most common goals: downsizing (smaller, less costly home) or upsizing (larger or upgraded, more expensive home).

It may be a good time to downsize but beware of the costs

I mentioned my friend who wants to downsize. From a cost standpoint, this may be a good time to do it. His house has increased in value, but so have those he is looking to buy. Yet the end game is the same: to live in a smaller, lower total cost of ownership house, which he can do if he’s patient and shops carefully.

As I wrote in an earlier article: ”If you sell a sizeable paid-for or nearly paid for house or one with a lot of equity, you may be able to purchase a smaller one with no mortgage, even if you had a mortgage on the larger one. That can be a big help in managing expenses in retirement.”

My friend’s challenge won’t be selling his house in this hot market; it will be finding the right property to downsize to. Most are sold almost as soon as they come onto the market, often at a premium over the listing price. (Plus, smaller, well-kept, single-story homes will always be in high demand among first-time buyers, retirees, etc.)

People tend to focus mainly on selling their current home and the price of the one they want to buy. That makes sense, but it’s also essential to anticipate the other costs involved; they can amount to more than you might think.

Selling and buying costs

First, although many houses are selling “as is,” you may need to spend some money on cosmetics or repairs to get the best price. (Those costs will vary greatly depending on the age and condition of your house.)

Next is the real estate commission, typically paid by the seller and is around 6 percent of the sale price. You will also have some closing costs, as will the buyer, but some are negotiable between the seller and buyer as part of the sales contract.

If you net a capital gain on the sale, you may have to pay capital gains tax, but that is uncommon due to the Section 121 exclusion included in the Taxpayer Relief Act of 1997. And of course, there are the closing costs on the other end (as said, some are negotiable).

Moving costs

After you sell, you’ll have to move. Those costs will depend on whether you do it yourself (perhaps with help from family or friends) or use a professional moving service.

The total cost will also depend on how far you decide to move. Movers charge for packing, loading, travel, unloading, and packing, depending on which services you contract for.

Plus, there will be costs to get re-established in your new residence. You may need to pay utility deposits, buy curtains or blinds, or make minor repairs. These costs may not be high, but they can add up.


There are non-financial personal ”costs” to moving. Depending on how far you move, you may leave friends, family, community, shopping, and medical professionals you have grown to love and trust behind.

If you go far, it may mean leaving lifelong friends and relationships are very important but aren’t as easy to develop and maintain as some might think. Plus, selling a home you have been in for a long time, especially if it’s the “family home” where you may have raised children, etc., can be an emotional loss. You are leaving the place where you made memories.

It may not be a good time to upsize (unless you need to)

Some want to take advantage of higher prices to “upsize.” That sounds a little counter-intuitive. Although you may be able to sell your current residence for more, you’re also likely to have to pay more for your “upsized/upgraded” house.

There will be situations where that’s not the case. An example would be moving to a lower cost of living area where real estate prices are less overall.

Some would say that the best time to buy a home is when you need to; because your life has changed. Examples are marriage, children, job relocation, retirement, etc. Retirement is undoubtedly a “life changer,” but many stay where they are.

But many retirees want to downsize, and a surprising number of retirees want to “upsize” their retirement home, which can take different forms. They may want a newer or nicer home in their area or one in a nicer (meaning a higher cost of living) location. Others want to live in a resort area, such as a mountain town or the beach, or on a lake—these tend to be areas with inflated real estate prices.

I wrote about our housing situation in a previous article. We considered “upgrading” to a smaller but newer home but have decided to stay put for the time being and make a few changes (repairs and minor upgrades) to our current home. The main reason was the total cost of making a move and the fact that we don’t need to move, at least not yet. Plus, we want to maintain the lifestyle (yard and garden, room for family gatherings and hospitality, etc.) our current home affords.

Your costs may be higher

The same categories of costs (selling, buying, and moving) apply when you’re upsizing. But in many cases, you will also have higher ongoing costs for utilities, taxes, and perhaps things like HOA dues.

If you pay cash for the new property and have to take money out of savings, you may have to pay taxes if it comes from a taxable savings account (such as a non-retirement brokerage account or traditional IRA).

And if you take on a new mortgage or a larger one that you had, your ongoing cost of ownership could increase dramatically, depending on the size of the loan, term, and interest rate. Furthermore, taking on a new 30-year mortgage if you are within 10 or 15 years of retirement may make it more difficult to get to retirement with a paid-for house.

Higher prices are bringing more and more sellers into the market, but there are still more buyers than sellers, which creates a shortage in the supply of homes for sale, which drives prices even higher.

Most economists and real estate experts say that this kind of market dynamic tends to be cyclical, and many think prices will moderate in the next 12 to 24 months as supply increases and demand subsides. Rising interest rates would also have a dampening effect on demand.

Prices may not fall to pre-pandemic levels any time soon, and almost no one is expecting a real estate ”crash” like the one that happened in 2008. Still, some declines from market highs are almost certain—that’s the way cycles work.

If you’re thinking about upsizing, take care not to be overconfident about timing the market. It may be best not to let rising prices and falling inventory prompt you to sell prematurely (i.e., before you had planned) as you could have trouble finding a place to move to and may pay more than you wanted on the other side of the transaction.

If you’re upsizing/upgrading, what you sell your home for will rarely cover the additional cost to buy the more expensive home. Plus, the price may be higher than you planned, and transaction costs may be higher as well. Let me illustrate.

If prices have increased 24 percent in your area over the last year (the average increase in the median price for a home in the U.S.), and you want to swap a house that was worth $200,000 a year ago for one valued at $350,000 at that time, then the $48,000 appreciation of your current home ($200,000 x .24 = $48,000) won’t cover the 24 percent increase in the more expensive one ($350,000 x .24 = $84,000).

So, instead of a difference of $150,000 a year ago, the difference in the appreciated selling prices for the homes is now $186,000. Thus, in addition to the original cost difference of $150,000, you’ll need to come up with the additional $36,000 to close the deal. If the area or neighborhood where your new home is located has appreciated at a higher rate (many have), you may need more.

But wait, there’s more! You also have to consider selling, buying, and moving expenses.

According to Zillow, the seller’s expenses can be as high as 8 to 10 percent of the sale price (most of which is the sales commission), which in our example above would be $22,320 based on 9 percent ($248,000 x .09 = $22,320). Your total premium to upsize/upgrade is now $208,320 ($150,000 + $36,000 + $22,320 = $208,320).

There will also be closing costs on the new home. Zillow estimates these to be between 2 to 5 percent, so we’ll estimate them at 3.5 percent or $12,250 ($350,000 x .035 = $12,250). The out-of-pocket expenses are now $220,570, which is more than you could have sold your house for a year ago. (Plus, we haven’t included moving costs and other miscellaneous expenses for things like utilities, new curtains, blinds, etc.)

Stay calm, and carry on

So what can you do to avoid this? There’s no easy answer because real estate markets (like most financial markets) are unpredictable. I am not a real estate professional (and I would strongly advise you to consult with one you trust if you are thinking of buying or selling), but here are some suggestions:

  • If you must move and can’t wait, don’t try to time the market. It’s easy to get caught up in the emotion of trying to sell your current home for top dollar while also trying to buy your next home at the lowest possible price. Trying to time things to maximize both can be very difficult.
  • If you want to downsize, this may be an excellent time to pull the trigger. You may pay a little more for the smaller residence, but you (hopefully) will get more for your current home. Plus, your ongoing costs should be less.
  • If you want to upsize/upgrade, make sure you understand the total cost involved. They may be more than you think. If you don’t need to move right away, consider waiting until things have calmed down a bit. (Sorry, I can’t tell you when that might be.)
  • Be wary of “we’ll buy your home for cash” advertisements or offers. These are professional real estate companies that “flip” or purchase homes to rent. These companies want to buy homes below market value. They may save you some time, but they certainly won’t save you any money. (If they did, they wouldn’t be in business. Your loss is their gain.)
  • Think twice about selling without a plan for where you’ll move. Selling now and renting and waiting for the real estate market to go down before buying may not deliver as planned. A satisfactory rental may be hard to find, and you may be surprised by the monthly rental expense. Deciding when to buy may also be challenging, as timing the real estate market is almost as difficult as timing the stock market.
  • If you must make a move, set a budget and stick to it. Ensure you know how much you can afford to pay for a mortgage, taxes, and insurance. Even if your friendly mortgage broker has told you that you can qualify for a larger mortgage, stick to your budget and keep some margin for emergencies, saving, and giving.
  • Give yourself some flexibility. Once you know how much house you can afford, rather than looking for homes at the top end of your budget (which could force you to stretch it too far), start by looking at lower-priced houses so that you have some wiggle room if necessary.
  • Don’t get caught up in a bidding war. Because many home sale prices are being bid up well above the asking price, stick to your budget and don’t get carried away in a bidding war that will set you up for financial challenges down the road. Be prepared to walk away if necessary.
  • Don’t make unrealistic concessions to buy a home. Some buyers are making “as is” offers and are waiving a professional home inspection. That may result in having to deal with big issues down the road. You don’t want to find yourself in a home with structural or engineering problems you missed by waiving the inspection.
  • Be prepared for a limited selection. A low inventory of homes for sale means fewer choices. That makes it especially challenging to look for a specific type of house (such as a single-story with three bedrooms and two baths and less than 2,000 sq. ft.). If you have real specific (or unique) wants or needs, waiting until inventories rise may be wise, even if your current house may sell for less than it would right now.
  • Consider staying put, at least for now. If you’d like to upgrade, consider what it would cost to improve your current residence, especially if you’re satisfied with the location and other aspects of the home. There’s something to be said for contentment, though as we all know, it can be elusive at times.

In this “real estate frenzy,” it’s important to remember that a house is, first and foremost, a place to live. You want it to be safe, functional, convenient, and reasonably pleasing in terms of its appearance. If you can have that in your current home, there may be no reason to sell and move just because valuations are high. Remember, “godliness with contentment is great gain” (1 Tim. 6:6).

Although the focus tends to be on home prices, market values will go up and down. We are currently on an upward trajectory, and that may be the case for several more years. But remember, that could change quickly. So, it’s best not to think of it purely in financial terms or mainly as an investment; don’t over-leverage yourself in hopes of greater financial gains in the future. Doing so may inhibit your ability to do other (more important) things with your money, such as saving and giving.


👋 Hi, I’m Chris Cagle, the founder of Retirement Stewardship, a blog that focuses on the various aspects of retirement from a Christian stewardship perspective (1 Peter 4:10).

I write as a retiree who is dealing with the things I write about. I base most of the articles on my research and experience applying it to my situation and how it might apply to yours.

If you’re new here, check out the site introduction for an overview. You can also learn more about me.


My Books

Redeeming Retirement: A Practical Guide to Catch Up (2021)
The Minister’s Retirement (2020)
Reimagine Retirement: Planning and Living for the Glory of God (2019)