More Homeowners Are Downsizing as They Get Closer to Retirement
As the baby boomer generation edges closer to retirement, a significant shift is occurring in the housing market: more homeowners are choosing to downsize. This trend isn't just about simplifying life—it's a strategic move driven by financial savvy, lifestyle changes, and the desire for greater freedom in the golden years. In areas like Folsom and El Dorado Hills, where demand for family-sized homes remains strong but options for single story, low-maintenance properties are fewer, this wave of downsizing is creating exciting opportunities for both sellers and buyers. Let's explore why this is happening now and what it means for you.
Nearly 12,000 Americans are turning 65 every day, a pace that's set to continue through the next couple of years. With 15% of older adults planning to retire in 2026 and another 23% following in 2027, the housing market is feeling the impact. Many of these homeowners have spent decades building equity in larger family homes, and as empty nests become the norm, the appeal of downsizing grows.
This isn't a fleeting fad. Data shows that baby boomers now represent the largest share of home buyers and sellers, often motivated by retirement, proximity to family, or the need for easier upkeep. In fact, a record 40% of U.S. homeowners own their homes free and clear, giving them the flexibility to sell without debt and reinvest in something smaller.
This chart illustrates the steady rise in mortgage-free homeowners, hitting an all-time high of over 40% in recent years—a boom for those looking to downsize without the burden of new loans.
Downsizing offers more than just a smaller footprint; it's about unlocking equity and reducing costs. The average homeowner today sits on about $299,000 in home equity, often even higher for longtime owners nearing retirement. By moving to a more modest home, retirees can free up substantial cash—potentially $200,000 to $500,000 depending on location—while slashing utility bills, maintenance, insurance, and property taxes.
Common reasons for this move include wanting to be closer to family (a top motivator for many over 60), finding the current home too large, or struggling with upkeep due to health or financial limitations. Surveys indicate that 47% of seniors would consider selling to rent, with 40% planning a move in the next five years for simpler living.
As shown in these pie charts, the primary drivers vary by age group, but "home is too large" and "want to move closer to family" consistently rank high among those 60 and older.
In the Sacramento region, including Folsom and El Dorado Hills, the market is transitioning to a more balanced state with increased inventory—up over 40% in some periods during 2025—providing more choices for buyers. Median home prices in Folsom hover around $759,000 to $775,000, while El Dorado Hills sees medians near $953,000, reflecting strong demand for premium properties. However, with aging homeowners gradually releasing larger homes through downsizing and estate transitions, expect gradual increases in available inventory without drastic price drops.
California as a whole is seeing robust trends, with median home prices hitting new highs and active listings reaching levels not seen since late 2019. This creates a prime window for downsizers in our area to sell high and buy into communities like The Parkway in Folsom or Serrano Village in El Dorado Hills, where smaller homes and condos offer luxury without the hassle.
This report on California's 2025 sales and prices highlights the upward trajectory, with inventory steady and prices per square foot climbing—ideal conditions for equity-rich sellers in Folsom and El Dorado Hills.
If retirement is on your horizon, downsizing could mean less stress, more cash flow, and the freedom to enjoy what matters most—whether that's family time by Folsom Lake or exploring the hills of El Dorado. But timing and strategy are key in our local market, where well-priced homes still sell efficiently despite more options.
As Folsom and El Dorado Hills' top realtors, Folsom Lake Realty agents are here to help you navigate this transition. Whether you're selling a family home or searching for that perfect downsized retreat, contact Folsom Lake Realty for a personalized equity assessment and market insights. Let's turn your retirement dreams into reality.
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