Right-Sizing Your Home

It was a lovely weekend. Years ago, my wife and I were in a B&B off Canyon Road in Santa Fe. We were sitting in front of the fireplace, sipping wine while little wisps of smoke curled up the fireplace front. They deposited tiny trails of soot on the stone exterior.

“Isn’t that lovely,” she said.

“Beautiful,” I agreed.

Suddenly, we both broke into hysterical laughter.

“Of course, if we owned it we’d be scrubbing it,” she said. “Aren’t you glad we’re at a B&B?”

One year later, we owned our first home in Santa Fe. We scrubbed the fireplace. We’re neat-niks and we love houses. I bet you do, too.

That’s why right-sizing— moving back from 70 postwar years of upselling bigger and bigger houses— is also a big opportunity for millions of Americans.

Here’s the nitty-gritty. Shelter is the largest single category of our spending at every stage of life. Shelter accounts for about 32 percent of the consumer price index. It’s nearly double what we spend on transportation. It dwarfs what we spend on food, clothing or medical care.

That reality offers of a major opportunity, particularly for soon-to-be Empty Nesters. The opportunity is Right-Sizing— getting a grip on what really meets your needs and getting rid of unexamined wants.

Right-sizing is not to be confused with Downsizing, which is a forced move to more modest shelter. Right-sizing is about setting your sights on shelter that really meets your needs, not special occasions, dynastic fantasies or dreams of speculative wealth.

Here’s my list of temptations/errors/remedies for our biggest lifetime purchase:

Saving-the-Palace-for-Last.

This is when a couple becomes empty nesters. They sell the house they raised the kids in and buy the largest house they have ever owned. They can do this because the tuition bills are gone, both can work, and suddenly all the money that was spent on kids is available to spend…on shelter. The new house has more square feet, more bathrooms, a bigger kitchen and closets larger than Rhode Island. The house also contains a dining room large enough to seat a Rotary chapter. This is all done in the expectation of visits on Thanksgiving Day.

Doubling Down.

The other use for all that empty nester income is buying a second home. You can qualify. You “need” the tax deductions. And you’ve always wanted a (pick one): lake house, ski house, beach house, hunting lodge, pied a tierre. The major question here is how much time you will spend in the second home. If you were going to pay 12 months of expenses for 4, 5 or even 6 weeks of vacation, you’d be better off slumming at a resort hotel where there will be no laundry to do, no honey-do list and maybe even no temptation to scrub a fireplace.

In the 1970s resort houses could actually pay for themselves, often appreciating by 7, 8, or 10 percent a year— more than it cost to own them. I know because I owned one. But that was then. Today a second home can be the equivalent of super glue— touch it and you’ll be stuck for life.

Dynastification.

Another big mistake is assuming that your children will want your house, or that it will be good to keep it for them. It won’t. If they do really well, they’ll want a house they picked for themselves. If they don’t do really well, they won’t be able to pay the air conditioning bill. We all like to think of a glorious multi-generational hacienda life, but the reality is that we live in a very mobile society. We buy the house we need when we need it. That’s what our children will want to do, too.

Reboot and Rent.

Sometimes it helps to experiment, to test how you adapt to different environments. Experimenting can be a lot more fun than assuming that everything must be bigger. Over the last 17 years my wife and I have owned 6 houses and done two rentals.

The rentals were major revelations. We found we could be just as happy in an 1,100 square foot apartment as in a 3,500 square foot house. That discovery gave us freedom and flexibility. It also moved us to think about what we really needed.

It wasn’t maximum space.