The environmental footprint of housing is greatly influenced by the size of a dwelling. Housing size is the result of households' dwelling selections; accordingly, it is critical to consider residential preferences and choices to inform efforts towards housing sustainability. This study aimed to understand tenants' preferences for and choices of housing size as one amongst several dwelling characteristics and identify obstacles and opportunities for reducing size in the light of promoting sustainable housing. We employed logistic regression models to analyse a survey with 878 Swiss tenants, and our results identify preference for large dwellings as a major obstacle for reducing dwelling size among affluent tenants. Conversely, tenants with lower income might be forced to move to a smaller dwelling due to financial constraints or attribute higher importance to the financial benefit of lower rents. However, financial disincentives along with substantial non-monetary costs of moving, such as the disruption of local bonds and the difficulty of finding a satisfactory dwelling, can outweigh the benefits of moving to a smaller dwelling. To overcome such obstacles, we suggest offering incentives and other facilitating measures for downsizing moves as well as ensuring an adequate supply of smaller dwellings capable of providing high living quality. We highlight the potential of studying housing functions to conceptualize dwellings fulfilling these requirements.