This blog is written as part of our Downsizing Guide For 65+, but it’s relevant to anyone weighing a smaller home against their current one. “Downsizing saves money” is one of those ideas that everyone accepts without ever running the actual numbers. In our experience, the savings can add up quite significantly, even after accounting for the upfront costs of moving.
We’re also going to discuss when to downsize. A lot of people say the time to downsize is when the home no longer fits your lifestyle. That’s an oversimplification. In our experience, a lot of homeowners are juggling multiple considerations, including the future appreciation they’d be giving up by selling. We’ll look at financial savings, as well as what to do with the equity unlocked when downsizing.
The Upfront Cost of Downsizing
Moving is quite pricey, which is why most of us only do it a few times in our lives. Below are the major expenses:
- Real estate commission on the sale of your current home
- Legal fees on both the sale and the purchase (roughly $1,200–$1,800 each)
- Land transfer tax on the new purchase
- Moving costs, which can run several thousand dollars depending on distance and how much you’re keeping
- Downsizing services: if you hire help to sort through furniture and belongings, expect to pay for that service
Most of our clients are unlocking equity in their current home and moving to a home that costs less to own long-term, so the savings outweigh the cost of downsizing.
Read more about the costs of selling a home here.
Where the Monthly Savings Actually Come From
Most people assume downsizing saves money because the mortgage payment shrinks. But savings come from carrying costs as well. Below are the major carrying cost expenses you might see drop:
- Property taxes: generally tied to assessed value, so a smaller home in a similar area usually means a lower tax bill.
- Utilities: heating and cooling a 3,500 sq. ft. house costs more than heating and cooling 1,600 sq. ft., especially as energy prices climb. Condos often have lower utility costs too, partly because shared walls mean less exterior surface losing heat.
- Insurance: premiums scale with square footage, replacement cost, and how much of the property needs to be covered. Condos tend to come with a lower insurance bill, since a large portion of the building is covered under the building’s primary policy, which is paid for through your maintenance fees.
- Maintenance: a smaller property means less maintenance and fewer repairs.
- Renovations: renovating a smaller home, or retrofitting it for aging in place, costs less than doing the same work in a larger one.
These savings are only a few hundred dollars a month individually, but they add up to a large difference over the years. For example:
- Property taxes drop from $10,000 to $5,000 annually
- Utilities drop from $500 to $300 monthly
- Insurance drops from $200 to $150 monthly
- Maintenance drops from $1,000 to $700 monthly
That adds up to a savings of almost $1,000 a month.
Timing: When To Downsize Your Home, Financially Speaking
A lot of homeowners considering downsizing struggle with timing; both in terms of what’s right for them personally, and when to sell for the best financial outcome. Your home is likely your most valuable single asset, so selling it should take some strategy.
What many of our clients struggle with, especially in appreciating markets, is parting with a large, beautiful home that’s appreciating at a good rate every year. If you sold your detached home in Oakville in 2016, you would have technically missed out on almost $600,000 of appreciation between then and today (2026).
It’s important to take a holistic approach to the timing of your sale. It’s usually best to sell while you’re still capable of handling the move yourself, and while you have the energy and patience to go out and buy your next home. If you’re are conflicted about moving to a property that might not appreciate as much as your current home, there are strong alternatives worth considering.
In that same 10 years that detached homes in Oakville gained roughly $600,000, the stock market saw astronomical gains. From July 2016 to July 2026, the S&P 500 saw a 316% increase in value (with dividends reinvested). So if you’d sold your Oakville home in 2016 and downsized, pocketing $400,000 to invest in the S&P 500, you’d have roughly $1,665,000 today. Of course, in retirement it’s important to invest safely rather than 100% in stocks, but even if just 25% of your investments were held in the S&P 500, you’d likely have come out ahead financially compared to keeping the larger home. On top of that, your new home would have cost less in maintenance, taxes, insurance, and utilities during that same period, potentially saving you close to $1,000 a month, or roughly $120,000, over those 10 years.
(These figures are illustrative and based on historical index performance and average local appreciation, they’re a useful way to think about the trade-off when weighing whether to downsize and invest your equity or to keep your larger home, not a guarantee of future returns. Past performance in both real estate and the stock market is not indicative of future results.)
It’s Not Just About the Money
We’d be doing you a disservice if we made this sound purely like a spreadsheet decision. Some of our clients downsize and are thrilled with the lower costs and lower workload. Others miss the space, the garden, or the extra bedroom for grandkids visiting. If you’re weighing whether the smaller home fits your day-to-day life, not just your budget, our guide on downsizing to a bungalow after 65 goes into the lifestyle side in more depth. Many downsizers who don’t want to compromise on the freedom of living in a freehold property choose to downsize to a bungalow rather than a condo. We’ve also written a guide for those thinking of downsizing to a condo — click here to read it.
Frequently Asked Questions
Is It Cheaper To Maintain A Condo Or A Bungalow?
It’s common for clients to assume a freehold home is cheaper to own because there’s no monthly maintenance fee, but we consistently see condos cost less in maintenance than a well-maintained freehold home over time.
What Is A Better Long-Term Buy, A Condo Or A Bungalow?
In the long term, it’s usually a freehold property. Condos are notorious for seeing value erosion as they age and maintenance fees climb; those fees generally increase faster than inflation too. Freehold homes usually hold their value better, because a lot of their value is tied to the land they sit on.
Is It Cheaper To Downsize To A Condo Or A Bungalow?
Condos typically have lower property taxes and maintenance responsibility but add a monthly condo fee to the equation; freehold properties have no monthly maintenance fee, but you’re fully responsible for every maintenance bill and major repair. That said, it’s usually cheapest month-to-month to downsize to a condo, while a similarly priced bungalow may hold its value better long-term. The right choice comes down to whether you’d rather have lower monthly ownership costs or stronger resale value. Our downsizing into a bungalow guide breaks this down in more detail.
Curious what downsizing would actually save you?
Every home and neighbourhood is different. If you want real numbers instead of an illustrative example, we’re happy to run them for your specific situation.
