There’s been a movement the past couple of years to move to a smaller home in order to save money. It’s understandable with the economy the way it is and all. Still, many people look to the time when they can get a bigger home. Sometimes you just need more space. Some just want the bigger place. I still see homes being torn down and re-built into much larger houses. Thing is, when you buy a bigger house you aren’t just paying a bigger mortgage. With a bigger house comes some other expenses and costs that increase.
Some Ways You Will Pay More With a Bigger House:
1) Taxes – More land and a bigger house will usually equate to more taxes that you will be paying. On top of your mortgage. And consider the fact that many find their new and bigger house in a different neighborhood (you know, one with bigger houses) so the tax base will be higher right off the bat. I live in New York and taxes can easily exceed $10,000 a year, if not much more depending on where you live.
2) Landscaping – Most bigger houses come with more land. this means more to take care of as far as landscaping. Now you can take care of your landscape yourself but you still have to buy supplies and equipment (if you don’t already have) to cut costs from hiring someone to take care of it for you. Even so, you may find yourself upgrading to a high-end mower before long if you lawn is spacious. Things like seed, fertilizer, plants, and such all add up. And if you hire someone, the bigger your landscape, the more you are going to have to pay. And again, the base of what you pay may be higher if you are moving to a more expensive neighborhood. You don’t want to be the one with the nice house but the bad lawn.
3) Utilities – Unless you are moving to a super energy-efficient house you will probably be paying more for utilities in a bigger house. More square footage means more space to fill up with air conditioning and heat. More bathroom mean using more water. A style I’ve seen a lot in the past years is to have these high ceilings that go up two floors. They look wonderful! But they also mean a lot of space to fill up with air and heat. A LOT of space. Oh, let’s not forget the bigger lawns that require more water as well.
4) Furniture – When you have more rooms you are going to want to furnish them. The furniture you have from your previous house may no longer be adequate in the new house. Furniture tends to be expensive (and what you buy cheap tends to be…cheap). For us, having a basement means a whole room that needs new furnishing. Or rather we update what’s on the main floor and move the old stuff to the basement.
5) Entertainment – Now that you have these nice size rooms, basements, dens, etc… you may find yourself upgrading your entertainment systems. Flat screens, sound systems, gaming systems…they all cost money.
6) Decorating – Moving in you may want to re-paint. More house means it will be more expensive to paint. You’ll probably have more windows as well for which you’ll need window dressings.
7) Stuff in General – It’s a cosmic law – the more room you have to store stuff the more stuff you tend to accumulate. You find ways to fill up empty space. More stuff creeps into the house and stuff costs money.
8 ) Upkeep – A bigger house is going to cost you more in general upkeep. Roofs don’t last forever. Gutters need to be cleaned. Air and heating systems need maintenance and will need repairs. Floors will be re-sanded. Decks need re-finishing. You get the point. With a bigger house it means all the things you need to do for the house will probably cost you more.
9) Insurance – Home insurance is going to be more expensive for a bigger place. An insurance company needs to figure our the cost of replacing your home should disaster hit as well as replacement costs for the contents of your home. More square footage means more money.
I’m not knocking moving to a bigger house. We bought a house because we needed more space with three kids running around. You just need to understand that covering your mortgage isn’t enough when you are calculating how much house you can afford. All sorts of expenses creep up besides what I’ve listed and you need to be prepared for them. Make sure you have emergency funds set aside for the surprises that creep up. Figure in an increase in your general maintenance when moving to a bigger place. Knowing what expenses to expect now will help you prepare and save you from trying financial times later on.
My experience is that primary factor in many of these expenses is not the size of the house but rather how recently it was built.
About 10 years ago we moved from an older smaller home into a newly built substantially larger home.
Our utilities and upkeep went down substantially and our insurance went down moderately. The only expenses that you listed that went up were real estate taxes and landscaping and they went up only moderately.
We ended up saving a great deal of money each month by moving into the newer home even with it’s far larger size. This is particularly true for the utility bills and upkeep.
Sounds like a great deal. I can definitely see how a new energy-efficient house can lower costs. Still, a bigger house can trigger other expenses like I listed. My main point is a person needs to understand when to expect.
Older homes are a double-edged sword: while they can cost you higher energy and upkeep bills, you may be able to buy them at a substantial discount relative to the newer houses in the neighborhood — especially if the previous owners neglected to maintain the home.
We bought a 99-year-old home (built in 1912) with serious neglect issues (no gutters, rot under the doors, sunken foundation). But we bought it for $225,000, while a comparable house on the same street — just 4 doors down! — costs $450,000.
Weigh both edges of the sword when evaluating an older home.
Age and condition of a home are definitely considerations to keep in mind when looking to buy a new house. You have to ask what you are willing to do and what are the costs of fixing things.
I’m gonna email this to my wife to help squelch her house fever. 🙂
Haha, hope it helps!
We’re in the process of building a bigger house right now and I am not looking forward to all of these additional costs. Property taxes will double, and since our house is new we have to build the fence to go along with the landscaping. The nice thing is that our new backyard will be half the size of our old one, which will save me some time and money in the long run.
Double property taxes? Ouch! Hope they aren’t too bad to begin with.
Jon | Free Money Wisdom says
Wow, just reading this post gave me a headache, but in a good way! I’m definitely sending this to a buddy of mine who is considering buying a house that they clearly can;t afford or need lol. This article reminds me again why I love renting! To date, I can still fit all my personal belongings in my car and plan to keep it that way at least until I’m married…
The urge to buy a house can be pretty strong but you are so much better off knowing what your expenses can be before than being two months into a mortgage and realizing you can’t hack it.
I can definitely validate your points. I moved from a 5 Bedroom 3 Bath home nearly 14 years ago to a 2 Bedroom 21/2 Bath Townhouse. All my operating and fixed costs are lower. Utilities went down almost in half, mainly because we are sandwiched between two units. Taxes were based on the purchase price which was less than half of the sales price. Obviously less furniture, upkeep and insurance. The biggest change was the smaller mortgage!
Wow, you take that saved money invested well over 14 years and that can be a tidy sum! Glad to hear the Townhouse is working well for you.
Darwin's Money says
To make matters worse…new construction.
We were considering selling here (for a loss) and buying new construction in the same area (so, conceivably, at a “discount” to values from a few years back).
I had a very detailed spreadsheet and accounted for all the stuff we’d need to do once we moved in – a new playset for the kids, window dressings, landscaping, patio, etc.
In the end, we stayed; just couldn’t justify it financially. But it’s definitely key to imagine everything you might need when moving, cost it all out and be realistic about it. I think a lot of people move and realize later (or finally face up to reality) rather than being realistic pre-transaction.
Exactly. People need to know, realistically, what they are in for when they buy a bigger house.
Little House says
These are all very good points. I’d like to add that a larger house means a lot more cleaning! Think of all those baseboards that are going to need to be wiped down every few weeks, ack! Okay, maybe only I think and obsess about baseboards, but still more rooms means more elbow grease. 😉
More room and elbow grease and also more cleaning supplies you need to buy and replace! OR, more you have to pay to have someone clean.
Mike - Saving Money Today says
Another thing about taxes…count on them going up! Mine have gone up every year since we bought our home.