Do you really need a bigger home?

Posted By : admin
Category : Budgeting
16 - May - 2016

As a bankruptcy attorney, I often see people who wish that they could go back in time and make a different decision.  Sometimes it is not opening a business, not signing a personal guarantee on a loan, or not buying a car.  But, considering that most people spend more money on their home than anything else…..one thing people most often regret is buying a bigger and/or more expensive home.

Since a home is such a large portion of the financial portfolio of most Americans, it is worth taking a long, hard look at life prior to “upgrading” your home.  Sure, sometimes adding on to your home or buying a bigger home makes perfect financial sense.  However, the purpose of this blog isn’t to look at how you might increase your home’s price through adding square feet (call your realtor to get his or her opinion on that).  The purpose of this article is to bring up a few things that I’m not sure Americans consider when they decide to buy a bigger home.

First and foremost, a growing family is the biggest reason that people seem to add on to their existing home or purchase anther home.  I get it.  My parents recently bought a home that is less than 1500 square feet/3 bedroom home from a couple who had just had their third child.  I can understand that couple’s desire for “Child 3” to have a bedroom.  However, I also see over and over again examples of people wanting to move from a 2400 square foot home with 4 bedrooms and 2.5 bathrooms to a 4000 square foot home with 5 bedrooms and 4.5 bathrooms when they have two children that are 11 and 13 years old.

When weighing whether or not to buy a bigger/more expensive house, I think the following should be taken into consideration:

First, assuming that your children attend college or move out of your house at the age of 18, you will only have 5 years with both children in the home.  Perhaps you have taken this into consideration and plan to sell the house after your youngest goes to college.  However, in my experience a lot of people hadn’t thought about the short amount of time that they will be a family of 4 under one roof.

Second, do you want to maintain, heat/cool, furnish and clean that extra space?  If you can afford a house cleaning service and have rooms full of furniture in storage then your answer might be a resounding, Yes!  On the other hand, if you need to go out and buy 3 full rooms of furnishings and decor have you considered the cost?  Do you want to spend your weekends cleaning an extra 2 full bathrooms?  Would you rather spend your time on home maintenance or spend a day at the park with your spouse and children?  Do you want to pay $1,500.00 more when you replace your carpeting for the additional rooms?  Do you want to have to remodel 2.5 bathrooms or 4.5 bathrooms?  Would you rather have a smaller house with nicer finishes or a larger house with lesser finishes?  Is the amount of the increase in property taxes going to cause you financial difficulties?  There is no right answer to these questions, but make sure that you have though about it.  In addition, I read a blog today that made another great point that is no matter how many places you have to sit in your house, you can only use one at a time.

Third, the bigger your house is the more places your children have to get away from you.  This may or may not pertain to your children….but those teenagers have a habit of avoiding parents and family time.  If your house is a “regular size” then you might have more family time to spend with your children on a daily basis.  For example, if you have an open concept home and the television is in your one main living space chances are that your children will congregate there and you will get to spend more time with them.

Fourth, my business partner shared a saying used by his grandfather which is, “Don’t build a church for Easter Sunday.”  This saying makes a lot of sense to me.  Buy the house that you need for the entire year and not just one day out of the year.  I also often hear that people want to own a house large enough for their children and grandchildren to stay in when they come come to visit (this is usually when their children are still in high school).  I think grandpa’s advice also works well with not buying a house for the benefit of future unborn grandchildren.

Fifth, I cannot finish this article without mentioning 2009-2012.  You home may not go up in value and the bigger/more expensive your house, the more money you are likely to lose if the house decreases in value.  Also, if life hands you lemons in the form of job loss, decrease in income, health problems, etc., it is more difficult to swing a larger mortgage than a smaller one.  I do believe that just about everyone takes mortgage cost into consideration when deciding whether to buy a bigger or better home, so that’s all I’ll say about that.

I’d love to hear what you think others should consider before “upsizing” or what you wish you would have considered prior to buying a larger and/or more expensive house.  Feel free to leave your thoughts in the comments.