> downsizing in the current market basically means that you pay way more for way less

Can you elaborate on that? It's pretty common for people to sell their 4 bedroom family house and retire to Florida. But it's not "way more for way less"

For seniors who sell a house they've owned for years (even decades), they're paying way more for each unit of "house" in this market.

Price per square foot tends to go up the smaller the home and the types of homes older people prefer (single-level, near hospitals, newer/lower maintenance) are in higher demand so they're also harder to find and more expensive.

Transaction costs (agent commissions, closing costs, moving) can be 8-10% of a sale. The capital gains exclusion is only $250,00 for singles and $500,000 for couples, so if you're sitting on big gains, a sale can come with a significant tax bill. In places like California, where assessment caps like Prop 13 keep property taxes low, buying a new home means that you could end up paying more in property tax on a much cheaper home. If you move into a condo, you have to deal with HOA fees. And so on.

Renting isn't always easy either. Senior independent communities can be really expensive (under some models you even have to pay hundreds of thousands of dollars up front) and even if you just rent a regular apartment, you need to compare the rents to drawdowns. $400,000 (the median net worth for 65–74 year-olds) provides $16,000/year at a 4% draw. The median rent for a 1 bedroom apartment in the US is somewhere between $1,200-$1,500.