Is Downsizing Worth It? How to Run the Numbers on a Smaller Home in NJ

Downsizing is worth it when the next home fits how you live and the numbers hold up on paper: what your current home nets after the sale, set next to the full cost of owning the next one. A smaller home doesn't always cost less in New Jersey, so run both columns before you decide.

I'm Dennis Mark Interdonato with The Dennis Mark Group. I tell people what they need to hear, not what they want to hear, and on this question that means real numbers instead of a feeling. Here's how I lay out the math for homeowners across Monmouth and Ocean County.

Why doesn't a smaller home always cost less?

Because the price tag is only one line. Square footage drops, but other costs can stay the same or go up:

• Price per square foot. A newer single-level home, a condo near the water or a home in a sought-after town can cost more per square foot than the house you're leaving.
• Property taxes. They follow the town and the assessment, not the size of the house. For 2025, the State's figures put the average residential property tax, before credits and deductions, at about $11,830 in Monmouth County, about $8,167 in Ocean County and about $10,570 statewide (NJ Department of Community Affairs). Averages hide a wide range, so the bill on the actual home is what counts.
• Association fees. A condo, townhouse or 55+ community usually carries a monthly fee. It may replace costs you pay now, like landscaping and snow removal, or it may not.
• The move itself. Selling costs, buying costs and movers all land in the same few months.

What goes in the first column: what your home nets?

Start with an accurate sale price, not a hopeful one. A free home value gets you a starting point, and my market evaluation gets you a number backed by data. Then subtract:

• Your mortgage payoff, and any home equity line.
• The realty transfer fee. The seller pays it when the deed is recorded, and it's based on the price (NJ Division of Taxation). Using the State's rate table, a $650,000 sale works out to $5,715. Some sellers qualify for a reduced rate, covered in the realty transfer fee partial exemption.
• Your attorney and the real estate fee. Fees are set by agreement, so use the actual numbers from your own agreements.
• Any updates before listing. Sometimes they pay for themselves several times over. A couple in Beachwood spent under $15,000 on updates I picked out, and the sale brought $75,000 more in total. Sometimes the as-is plan wins. You see both before you decide.
• Tax on the gain, if any. Most owners who meet the IRS tests don't owe any, but long-owned homes can go past the exclusion. See capital gains on a home you've owned for decades.

What goes in the second column: the full cost of the next home?

This is where the surprises live, so list every line, monthly and up front:

• The price and the buyer's closing costs. Title, attorney, lender charges and prepaid items. See buyer closing costs in New Jersey.
• The mortgage, if you'll have one. Your lender gives you the payment. Don't guess at it.
• The actual property tax bill. I pull it on every home on your short list.
• Association fees and what they cover. Get the budget and the rules, not only the monthly number. More in HOA and condo fees in New Jersey.
• Insurance. A condo owner's policy covers different things than a homeowners policy, so get a real quote.
• Upkeep. A roof near the end of its life or a furnace from another era is a cost, not a detail. As a former New Jersey home builder and remodeler, I read the roof, the mechanicals and the renovation work on the next home so you see those costs before you make an offer.

Do property tax relief programs change the math?

They can. ANCHOR, Senior Freeze and Stay NJ each look at where you lived and when, so a move can change what you receive for a year or more. ANCHOR, for example, goes by the qualifying home you owned or rented and lived in on October 1 (NJ Division of Taxation). Budget the next home at its full tax bill, and treat any relief as a bonus until you've confirmed it. Here's what happens to each program when you move.

Should you wait for mortgage rates to drop?

If the next home involves a mortgage, waiting is a gamble. When rates fall, more buyers come back. According to National Association of REALTORS® research, a one-point drop, from 7% to 6%, could add about 5.5 million households to the pool of potential buyers (NAR). If the payment works today and the home is right, the competition you'd face later is part of the math too.

Frequently Asked Questions

Does downsizing always save money?

No. Property taxes, association fees and price per square foot can offset a smaller footprint. That's why you run both columns before you list.

What costs do people forget when they downsize?

The realty transfer fee on the sale, the buyer's closing costs on the purchase, association fees, a condo insurance policy, and the cost of moving and clearing out a home that's been lived in for years.

Should I pay cash for the smaller home?

That's a question for your financial advisor and lender. I give you the full numbers on both homes so that conversation starts with facts.

How do I find out what my home will sell for?

Start with a free home value, then I'll walk the house and give you a market evaluation before you sign anything.

This is general information, not legal, tax or lending advice. Tax and fee figures come from the NJ Department of Community Affairs and NJ Division of Taxation pages linked above, checked October 10, 2026. Your attorney, tax professional and lender confirm the numbers for your own situation.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• How Dennis Mark plans a downsizing move and the Downsizing Guide
• How to downsize your home in New Jersey, step by step
• Using your home equity to buy your next property
• What will my home sell for?
• Have a question this didn't answer? Send it to Dennis Mark and it may become the next article.