I've been thinking about the idea of selling our 4 bedroom house down the road and getting a three bedroom house that would be worth about 80 k less, and then adding the 80 k to investments (current house has no mortgage). The only drawback financially I can see is that our property tax basis would go up, as we bought our current house at 172k, would sell it for about 320k now, and buy a new one at about 240k, so our new property tax basis would go from 172 to 240k. Such is life in the California property tax world.