Financial Tip Friday: How Much House Do You Need?

Financial Tip Friday: How Much House Do You Need?

I was recently talking with a colleague of mine who is looking to buy a house. He has been approved for a loan that is literally five times his income. There are a number of rules of thumb for buying a home, but typically five times your income is out-of-bounds even with a great down payment. One of the other things we were discussing is the size of house that he needed. It is only he, his wife, and their son. He was thinking that they would like a home for somewhere in the area of 2000-2500 square feet. In fact, he really wasn’t even considering homes that were any smaller, which is one of the reasons that the homes he was looking at were so expensive. Our conversation got me thinking about how much room do people really need.

I have another friend of mine who it is her, her husband, and daughter who argue that their 2800 square foot home is too small and they need even more room even though they don’t plan on having more kids. I just have to ask myself when I hear both stories is how much stuff do people have? Maybe that is one of the reasons we have such a housing affordability problem in the United States.

The average home in America has grown by nearly 40% in square footage since the 1980s, doubled in size in the 1960s, and the average American household has actually gone down.

The house that I grew up in was pretty small. It was probably no more than 1300 square feet. The current home that  I own is just over 1300 square feet, although we could create more room by redoing the attic but that would cost $30000 and that is money we don’t have. The home that my ex-wife and I owned was over 2400 square feet and we didn’t even furnish all the rooms and the rest were sparsely furnished. I still wonder why that we bought that house in the first place.

So the question remains why do we need such big homes? Is it the fact that we have gone consumer crazy? That we just have more stuff? Or is this more about manufactured spending. The bigger the house, the more stuff we need, the more luxurious and successful we feel.

Frankly, I like living in a small house. I don’t like just buying stuff to have stuff. I don’t like not using rooms in our house. That doesn’t mean I wouldn’t like another bedroom for another guest room or a little more room to create another bathroom, but part of that is I want to improve the value of the home not that we need the room.

My charge to those of you who are buying a home is this: do you really need all of the room that you have? If it is just three or four of you do you need 2500 square feet or will 1500 do just fine. My suggestion to you that a smaller home, particularly with a smaller family would work just fine. Don’t get sucked into keeping up with the Joneses. Typically, smaller homes are easier to heat/cool, maintain, and aren’t that difficult to be resold, particularly with the tiny house movement. Maybe the tiny house movement will force us to rethink about what is important in our lives. Just having a bigger home forces us to manufacture spending. More stuff doesn’t bring you happiness, just bigger bills.

If we ever do buy another home in the future I must say that I have enjoyed living in our smaller than average house. It is really how you use the space. How much home do you really need?

3 thoughts on “Financial Tip Friday: How Much House Do You Need?

  1. We used to own a home that was 2500 sf and honestly we felt excessive. It takes a lot of energy to heat & cool a larger house. We felt guilty about our carbon footprint. We didn’t utilize all the space & it felt just wrong. Our currect house is 1600 sf and we are much happier!! Less to heat/cool & clean! We love the smaller space – & have plenty of room. Just perfect!!

    1. I agree, which is why we decided to buy smaller. Don’t get me wrong big families certainly need the room and I can understand people wanting different parts of the house for different uses, but if you aren’t using them why not move? Why not move to a smaller house? To me a house is just a house.

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