In What Ways is a Bigger Home "Worth It"?
In What Ways isn't It?
by www.SixWise.com
Since 1950, the average house in the United States has more
than doubled in size to reach an average of 2,349 square feet.
No longer -- if they can help it -- will families share a
bathroom as they often did in the '50s, nor will three or
four kids share a bedroom.
The average U.S. home has doubled in size since 1950.
|
Americans buy big
homes for many different reasons. For space, for status,
for tax breaks, for the neighborhood (and schools), and for
a feeling of security. But is a bigger home really a better
investment than a smaller one?
A big home will generally appreciate in value, which means
that whenever you decide to sell, you stand to reap a profit,
but there are many other things to consider.
The Real Cost of a Big House
Right off the top, a bigger house will cost you more in property
taxes, which are about 1 percent to 2 percent of your home's
value. Utilities will also cost you more in proportion to
how much bigger your home is. For instance, a house that's
twice the size of your old one will likely double your energy
costs.
Bigger houses also call for more homeowner's insurance, and
higher premiums, and cost more to repair and maintain (figure
maintenance at about 1 percent of your home's value). They
may also have bigger yards (and therefore higher landscaping
costs).
From an investment standpoint, bigger homes do qualify for
bigger tax breaks, but they probably won't compensate for
your higher out-of-pocket costs.
Experts recommend spending about 30 percent of your
income on housing.
|
In fact, The Wall Street Journal broke down two retirement-savings
investment strategies to find out which was the better option.
The options were:
-
Buying a "small" $400,000 home and paying down
the mortgage for 30 years while putting your savings in
stock and bond mutual
funds.
-
Trading your $400,000 home for a big $1 million home,
paying down the mortgage, then, come retirement, trading
back down to a $400,000 home and living off of the profit.
Which strategy was the winner? "The small-house strategy
wins hands down," the analyses found.
How Much House is Too Much?
Ultimately, you should a buy a house that has enough room
for your family so that everyone's comfortable, while keeping
in-line with how
much you can afford (experts say you should spend about
30 percent of your total income on housing).
Of course, what constitutes a "big" house is all
relative.
"I always wanted a house big enough that my kids could
be in their room screaming, and my wife could be in a room
screaming, and I could be somewhere else and not hear any
of them," said Michael Frisby a former White House correspondent
for The Wall Street Journal about his 11,000-square-foot home.
For others, a two-bedroom condo in the heart of an urban
area can feel like a castle.
What's the bottom line? Your home should fit in with your
lifestyle and your budget.
"Buying a bigger house isn't an investment," writes
author Jonathan Clements in The Wall Street Journal Online.
"Rather, it is a lifestyle choice -- and it comes with
a brutally large price tag."
Recommended Reading
Amazing
Facts about U.S. Homes & Home Owners, and the Most Common
Styles of Home in the USA
15
Easy Landscaping Tips to Add Appeal and Value to Your Home
Sources
NPR.org
RealEstateJournal.com
MSN
Money