When should a parent move or downsize to a smaller house?

The first and biggest step to downsizing is getting rid of "stuff". It is THE most important thing to do no matter how old you are.

I've had to have gentle, small and frequent discussions with my mom about this. We have agreed that I will do what it takes to keep her in her home as long as it works for BOTH of us. I have my own home to manage and upkeep, still work and have kids and a grandkid who lives with us. I've diplomatically made it clear that there would be no point in having me (and my entire family) orbit around her just so she can have the illusion of independence and living out a romanticized notion of aging/dying in place. Too exhausting, too expensive, too unrealistic.

You don't mention how old or what condition your parents are in, but if they're over 70 I think moving to a house makes no sense whatsoever knowing they will be less and less able to keep it up (or pay the mortgage). It is not easy to just hire people for yardwork, maintenance, cleaning...there is a population drop and labor shortage. It will be neither easy, nor inexpensive nor fast! And, someone (you) will eventually need to coordinate it all. This is IN ADDITION to any other care you are choosing to provide, like taking them to doctor visits, managing meds, overseeing their finances... If you are PoA and your parents are "assuming" you will ramp up care of them as they age, this arrangement needs to work for you or you will burn out. This will probably disappoint your parents briefly, but if they are reasonable people they will see the wisdom in their NOT buying another house. Honestly, they should consider going into a senior community (IL) that has a continuum of graduated care levels. It would be the best "gift" they could ever give their children. It's the best way to age "gracefully". Good luck!

When the home no longer works for them.
Look up IADLs and ADLs to acquaint yourself of these living skills anyone needs to remain independent.
A smaller home is sometimes a good idea but not always. Location. Access to amenities. Taxes. Ability to safely ambulate. Many factors to consider.
The local Area Agency on Aging (each county has one) can do an assessment of the parent and help determine what services they need now or in the near future. This should help make an appropriate decision for your parent.
Note: Look up Atul Gawande’s book “Being Mortal, Medicine and What Matters in the End”. It’s a good book to read if you haven’t on helping a parent live their best life all the way to the end of their life.

This can get confusing as after a certain age it is not about wants, it is about needs and making rational decisions. Many seniors stay in their homes much too long, they have a façade of independence but that is all it is, everyone is doing something for them, so that they can pretend that they are independent.

Moving them into an Independent Living apartment, with a step up program would most likely be ideal. What is the purpose of buying another home at their age? Does this really make any financial sense? Why not invest the proceeds from the home so that a cash flow stream can be in place for their future?

Good Luck!

A parent should move BEFORE it becomes necessary and an emergency for them TO be moved, by us, the children, after they fall and break a hip or get hospitalized for pneumonia, etc and have the rehab or hospital refuse to release them back to independent living. The best thing would be to get your parent into an Independent Living senior complex that has a continuum of care.......so s/he can segue from IL into Assisted Living or Skilled Nursing should the need arise. It's not really about what they 'want' after a certain age, but what they need for their safety and well being. And what's required so that we are not called every hour to come fix another crisis that's a result of their 'independent' living situation. That's not 'independence' at all if they're reliant on us for everything!

Best of luck!