How Big of a Home Do You Need?
Take a look around you. How much square footage do you live in? How much would you like to live in? How do those spaces compare to the home you grew up in? Those that your parents grew up in?
Chances are, the square footage you’re living in, or looking for, far surpasses that of the home you or your parents had in decades prior. Americans have been buying larger and larger homes, and the trend isn’t showing any signs of stopping.
According to research done by The Census Bureau (as reported in AEI), the average size of a home in America has grown 1,000 square feet since the 1970s. In some cities, that’s the size of an entire one-bedroom apartment getting added on to a home. While there are some positives to the trend, this unchecked growth can wreak havoc on Americans’ finances. Before you know it, the idea of buying a home of less than 2,500 square feet seems downright unreasonable. But is it, really?
When you look at new homes, try not to think about what your peers live in or what you see on TV. Instead, focus on some of the key points below to ensure that you’re buying into the size of home that you need. Just because others are buying a certain type of home doesn’t mean you have to do the same.
Remember that More Isn’t Always Better
Real estate agents typically advise having a checklist of what you want and need before you set a budget and start viewing homes. To make sure your budget doesn’t creep up, ask yourself these questions:
- Will I be having guests over more than three times per year?
- Will I be working from home at any point?
- Do I believe that my kids need to have their own rooms?
- Will I ever use a formal living room?
- Will I ever use a formal dining room?
- How much stuff do I have – is a lot of closet space and/or a basement important?
- Do I see my family spending a lot of time in a “great room” or den?
The purpose here is to get aligned with how you need your home to function. When viewing an exciting new property, it will be easy to forget what you actually want and what will go unused after you move in.
Another question to keep in mind is how long you plan to stay in this home. Are you looking for a forever home, a starter home, a family home, or are you downsizing? Know what you need this home to do for you and for how long. This will help keep you on track.
Keep in Mind the Costs Beyond the Mortgage
Remember that the mortgage itself is only part of the cost you will pay every month. In addition to the mortgage principal and interest, there are also taxes, possibly HOA fees, furniture for the home, water and electricity, and heating and cooling – not to mention any repairs or remodels that may be needed.
Perhaps a 3,000 square foot home could fit nicely into your budget, but first you should run the calculations on how much it will take to heat and cool it every month of the year.
Before you shop for a home, do some research on things like energy bills and taxes based on home size. This will protect you from unknowingly getting in over your head and ensure that you get a home you can afford.
How to Find the Right Fit for You
Buying a home, much like other milestones in life, will elicit many opinions from many different people. Friends, family, and your real estate agent will provide advice – but only you can ultimately decide what is right for you.
The question isn’t what’s the best home your budget could buy. The question is what’s the best home for you that your budget can buy. Here’s how to answer it:
Highlight your top priorities and write down the things you can live without.
Not a cook? Maybe you don’t need a chef’s kitchen. Do you only dine as a family on Thanksgiving? Scratch that formal dining room. Live in a temperate climate? Maybe a driveway instead of a garage is good enough. Do all your loved ones live nearby? You probably won’t need a guest room.
Once you have your list of things you don’t need, look at your family’s lifestyle. Then you can prioritize the things that matter in your daily life over the things that look nice in a home showing.
Are your kids adventure-lovers that would rather climb trees than sit in their room? If so, maybe you can sacrifice some indoor square footage to get a larger lot. On the other hand, if your kids prefer to retire to their own space then you might need a separate bedroom for everyone. Do you tend to congregate around the kitchen as a family? If so, you’ll want to find a home that has a good portion of the square footage concentrated there.
Knowing what is and isn’t necessary for you on a daily basis is the best way to choose the right home for you instead of the “best” home per conventional wisdom. This will enable you to invest your funds in areas that will add value to your life.