Downsizing — long considered a natural next step for empty nesters — is becoming increasingly difficult across the U.S. as housing costs rise and smaller homes remain in short supply. A new analysis from independent insurance agency Choice Mutual finds that in many markets, homeowners are no longer able to rely on the sale of a larger home to easily fund a move into a smaller one, with some even facing additional out-of-pocket costs.
Choice Mutual examined 100 major housing markets using Zillow Home Value Index data, comparing 25 years of appreciation (January 2000 to September 2025) for four-bedroom homes with the current cost and availability of two-bedroom properties. From this, researchers developed a “downsizing strain score” to rank where the transition is most difficult. The findings point to a clear trend: In several cities, strong home value growth has been offset by even higher prices for smaller homes and limited inventory.
The Most ‘Downsizing Strain’
Topping the list is El Paso where downsizing strain is highest. Over the past 25 years, the average four-bedroom home has gained about $152,689 in value, but the typical two-bedroom now costs around $156,669 — essentially canceling out any profit. Inventory is also a major issue, with roughly 23 times more four-bedroom homes than two-bedroom options available.
Austin ranks second nationally, with larger homes appreciating by nearly $294,588, yet two-bedroom homes averaging about $363,196, leaving a relatively small financial cushion for sellers…