Because home prices and mortgage interest rates currently are so low, if you are in a stable financial position, now might be a good time to enter the home buyers’ market or sell your current house and buy a bigger one.
Remember all of the McMansions people built and bought before the housing bubble burst? Perhaps you are tempted to get your own larger, dream home.
The question is, should you?
If you have weathered the current recession and have the funds, those beautiful, large houses that were built just fifteen to twenty years ago may be tempting. Even if the price on a larger house is one you can afford, think carefully before upsizing. With an upsize comes many other upsized costs.
Consider the following if you want to buy a bigger house:
While prices have dropped on larger homes, they have also dropped on smaller homes, making the latter much more affordable, especially when you figure in the taxes.
Typically, the larger (and nicer) the home, the more you pay in taxes. Depending on the area of the country where you live, you could be paying several thousand more dollars per year in taxes by upsizing your home.
A bigger home takes more energy to heat and cool, and there are more rooms to light. Even if the price of larger homes is currently affordable, the utilities could cost several hundred dollars more per month for a big house versus a smaller one.
Simply put, there are more expenses in a larger home because there is more space. If you need a new roof on a 1,200 square foot home, it will be much more reasonable than a new roof on a 3,000 square foot home.
Because most appliances and utilities are larger to accommodate a larger kitchen in a bigger home, they will cost more to replace.
More square footage requires more furniture to fill the home. Even if you currently own a home, you will probably need to buy more furniture to fill the space.
Buying new, depending on the amount of furniture you need, can easily cost several thousand dollars or more.
While some minimalists love blank white walls, most of us don’t.
Many people like to put their own touches on a home when they move in. If you want to renovate and buy new carpets or hardwood floors or even just paint the walls, expect to spend more money to do so because it is a larger space. There are also more windows to cover and more wall décor to buy.
If you are so inclined, you can choose to clean a 1,200 square foot home and get it done in a few hours. If your home is 3,000 square feet or more, it could take you quite a bit longer to clean.
If you choose to hire a housekeeper, you are adding on yet another expense.
Limited growth potential
If you move to a large house that is the nicest one on the block, you may experience limited growth.
The housing market has been down for a few years now; no one knows when there will be a rebound or if there will be a full rebound.
One thing is sure though, if you moved into the nicest house on the block, you have limited the potential increase in your home’s value.
While it is tempting to upsize into a nice, large home that may have previously been out of financial reach, think carefully about making this purchase.
The home price is only one consideration. There are many other expenses that come with a larger home.