How Much Home do You Really Need?

 

If buying a home is one of the hallmarks of the American Dream, then buying a large home is the supposed calling card of success. Many people equate a large, opulent house with being successful in life and thus strive to keep getting bigger and bigger houses.

But how much house do you really need? At what point are you just wasting money, space and just showing off a bit? I know of a very well off couple are in their 60’s, have no children and own a 3 story, 5,000 sqft home with an elevator. How much of that home do you think actually gets used?

Now, I’m not knocking anyone else’s success and people are free to spend their money as they see fit. But our nation seems to be obsessed with “keeping up with the Jonses” at all costs… even their own financial ruin.

Common Sense Trends

Many people have caught on that they don’t need to consistently upgrade to larger houses to tell the world they are doing well.

Currently, the average U.S. home is 2,438 sqft and according to a survey from the National Association of Home Builders, more homeowners are looking to live in smaller homes. 75% of home builders are predicting that by 2015 the average home will be 2,152 square feet.

The growing trend is favoring homes that are built with green principles in mind to reduce utility bills while also being smaller to reduce the mortgages. Larger homes with more square footage have to be cooled, heated, maintained, insured and taxed whether those square feet are being used on a regular basis or not. Bigger homes mean more costs and more of your income devoted to housing instead of savings (for yourself, your children’s education and emergencies) or even being used to actually go out and enjoy life more!

Tiny Homes

Like we are known to do, some Americans are taking the smaller home trend to extremes. Many people are purchasing or building so called “tiny homes”, or houses that are 500 square feet or under.

There are many reasons why someone might want to live in one of these, but the most common are:

  • No Mortgage: A home like this often costs around $16,000 to build and most people building them actually pay cash for them. If not, they can be paid off much more quickly than traditional homes where $16,000 might not even be enough for a down payment.
  • Low utilities: Do you know how much it costs to heat and cool a 500 sqft home? Either do I, but it’s a lot lower than what most people pay.
  • Spend Less: With no mortgage, you might think people are apt to spend more of their income elsewhere. And while you have more motivation to get out of the house when it’s something this small, many report spending a lot less money on other aspects of their life. Think about it; with limited space, you have to be a lot more picky about what you buy, why you buy it and where you’re going to put it.

Personal Choice and Your Needs

When it comes down to it, the size of house you buy is going to depends a lot of factors including what is available to buy/build in your desired location, your price range, your personal choices and your needs.

If you have 6 kids, I don’t think a “tiny house” is going to work. Or, if you just need space to stretch out and feel claustrophobic in anything small, then maybe the extra costs of a larger home are in the cards for you.

Be honest with yourself and examine your life (and future plans) and decide accordingly. Picking the right sized house now will save you a lot of stress later.