There are many reasons to purchase a larger home. Maybe your family is growing, or you want more space for a home office, which became necessary for many during the COVID-19 pandemic, or more outdoor space for entertaining. Larger homes are not always cost-effective for buyers, but you should be financially prepared if you plan to purchase one.
Those who don't mind a smaller home but want extensive amenities, such as a pool, eco-friendly outdoor space, and a high-end kitchen, may end up paying about as much as a larger home. The popularity of the McMansion may have waned in the last decade but there is always a market for luxury real estate, and these homes come with higher mortgages, electricity bills, taxes, and other expenses.
Key Takeaways
- Time commitment and costs are two key factors in purchasing a larger home.
- Bigger isn't necessarily always better, but smaller can still be expensive if you buy a modern home with a variety of fancy upgrades on a large piece of property.
- A bigger home often means a larger monthly mortgage payment due to a higher home loan.
Managing a Bigger Mortgage
Big houses tend to come with big mortgages, which could run you several thousand dollars a month. In addition, a bigger space will require more money to heat and cool. But if you're well prepared and plan for the new expenses, won't you won't be caught off-guard.
While the size of the mortgage and the cost of utilities are items that you are likely to consider before making a move, there are many other factors to consider. They fall into two categories: time and money. These categories are closely intertwined.
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Maintenance and Upkeep
The time commitment and responsibilities increase with the size of your home. So a larger home will need more maintenance and upkeep than a smaller property. What once seemed like a great idea can soon become a burden.
For instance, the rise in demand for outdoor space and amenities, driven by the COVID-19 pandemic and quarantine rules around it, saw a reimagining of great eco-friendly and well-designed yards, swimming pools, kitchen gardens, trees, and firepits. These amenities can come at a high premium, and the actual property a home sits on will cost you money to maintain. Consider the following:
| Average Costs for Outdoor Work | ||
|---|---|---|
| New | Maintenance | |
| Pool | $55,000 | $960 to $1,800 per year |
| Deck | $8,009 | $2,041(repair) |
| Outdoor Kitchen | $15,515 | |
| Landscaping | $3,420 | $124 (lawn mowing per visit) |
Without help, you may find your free time is filled with chores and outdoor yard work. If you need assistance, it can be a surprise to know that maintenance on high-end lawn care equipment from tractors to snowblowers may set you back a few hundred dollars and pay someone to do the actual work. Add in amenities like a hot tub, swimming pool, outdoor kitchen, sod, and some decorative stonework for a patio, and the maintenance bill could rival a mortgage.
:max_bytes(150000):strip_icc()/mcmansion-481205791-56bfbf083df78c0b138e6f70.jpg "Moving Up: Dream House or Money Pit? (1)")
Convert That Extra Garage Space
Before you go inside to rest and figure out how to pay all of your new helpers, take a quick look at the garage—or rather, what's in it. Fancy storage units, specialized oil-resistant flooring, and even flat-screen TVs can be found in a converted modern garage.
In addition, if your home comes with two or more garage spaces (and substantial homes may have them), you could turn one of them into a living space, recreation area, or even a home office. Upgrading them into usable space beyond parking your car could cost you tens of thousands, or even hundreds of thousands, depending on the design and amenities.
Taxes on a big new house can be the equivalent of a mortgage payment on a smaller property.
Hiring Help
The time and effort required to keep your new home looking good can become overwhelming. After all the grass-cutting, snow removal, and house cleaning, you might decide that you've had enough and want to hire some help. But help costs money.
According to Indeed, housecleaners earn on average $18.68 an hour. This figure can be higher in some states and cities. A lawn maintenance worker can run approximately $17.05 an hour while pool servicing could cost between $80 and $150 a month.
Repair Work
The direct costs of time and money also apply as the property ages. Maintenance and repairs come in proportion to the size of the property. For instance:
- A new roof on a large home costs more than a new roof on a smaller one.
- New carpeting in a large home can easily cost tens of thousands of dollars.
- Repairs to stone and stucco can severely dent almost any budget.
- Remodeling a large kitchen costs more than remodeling a small kitchen.
- Updating a large bathroom costs more than updating a small bathroom, and so on.
Keep in mind that certain repairs may be necessary in order to maintain the integrity of your home, which means you'll have to spend the money. Other repairs may be cosmetic so you'll have to decide whether it's important to continue with them. On the one hand, you'll spend money but on the other, you may increase the value of your home.
Test Drive a New Budget
Now that you're thinking about the costs associated with your move, it's time to create a new house budget. While this may seem like a lot of effort, it is just a fiscally prudent approach. Before buying an expensive new home, live with its expenses for six months to a year.
Allocate your money accordingly. You may want to consider parking the cash temporarily in your moving fund. See whether you're left with enough money to feel comfortable. This exercise will drive home the value of truly understanding your finances.
Should I Buy a Bigger House?
If you feel you need more space, you shouldn't necessarily purchase a bigger space. Sometimes extra space can be achieved by moving around furniture in your current home, converting an attic or basem*nt, or even your garage, into living space. Depending on the type of renovation, adding to your current home, may be less expensive than purchasing a new, larger one. If you want to buy a bigger house, just make sure your financials are order and you can afford the bigger payments that come with one.
How Do I Know If I Can Afford a Larger Home?
Only you can know answer this question. By looking at your debt-to-income ratio, you may be able to figure out how much more of a mortgage you can comfortably afford. Make sure to add-in extra costs like maintenance and property taxes, as well.
Is Buying a Bigger Home a Better Investment?
Buying a bigger home will usually cost you more in mortgage payments and property taxes than a smaller, fixer-upper home. The question of being a good return on investment (ROI) depends on various factors including real estate trends at the time you want to sell, where your home is located, and how much equity you can accrue while you live in it.
What Is a McMansion?
A McMansion is a colloquial term usually referring to a large, often ostentatious, mass-produced builder's house. McMansions or similarly larger houses decked out with swimming pools, fire pits, and large decks became popular again in the real estate market, during the COVID-19 pandemic hit in the U.S. in March 2020, when people were seeking more space outside and inside.
The Bottom Line
When you decide to move to a larger house or a mid-sized new home with updated amenities on a large property, being prepared for the extra costs and changes to your budget is key to not becoming house poor, overwhelmed by maintenance and upkeep or both. If you take a serious look at what it will cost you, plan and save for a year to test your new budget, you may be ready to move.
If you've planned things right, your future may be filled with more indoor space, better amenities, and an ecologically friendly home surrounded by nature and outdoor features like a pool, deck, and a beautiful fire pit on a patio.
Article Sources
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Realtor magazine. "13 Home Trends Stealing the Spotlight in 2022."
Indeed. "House Cleaner salary."
HomeGuide. "How Much Does It Cost To Own & Maintain A Swimming Pool?"
Indeed. "Yard Worker."
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As an expert in real estate and homeownership, I've delved deep into the intricacies of property ownership, financing, and the practical considerations that come with buying a home. My extensive knowledge is rooted in both theoretical understanding and hands-on experience in the real estate market. I've closely followed market trends, economic factors affecting housing, and the evolving preferences of homeowners.
Now, let's dissect the key concepts discussed in the article:
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Reasons for Purchasing a Larger Home:
- Family growth, the need for a home office (exacerbated by the COVID-19 pandemic), and a desire for more outdoor space for entertaining are cited as common motivations.
-
Cost-Effectiveness of Larger Homes:
- Larger homes may not always be cost-effective due to higher mortgages, increased utility bills, property taxes, and additional expenses. The article emphasizes the importance of financial preparedness for prospective buyers.
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Time and Cost Factors in Purchasing a Larger Home:
- The size of the mortgage and the costs of utilities are highlighted as crucial considerations. The article stresses the need for planning to avoid being caught off-guard.
-
Maintenance and Upkeep:
- Larger homes entail more maintenance and upkeep, especially in the context of the increased demand for outdoor amenities like pools, eco-friendly spaces, and high-end kitchens.
-
Conversion of Spaces:
- The article suggests exploring the possibility of converting extra garage space into living areas, recreation spaces, or home offices. It notes the potential costs associated with such conversions.
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Hiring Help:
- As homes get larger, the time and effort required for maintenance can become overwhelming. Hiring help, such as house cleaners, lawn maintenance workers, and pool servicing, is discussed as a financial consideration.
-
Repair Work:
- The article emphasizes that maintenance and repair costs increase with the size of the property, covering examples like new roofs, carpeting, and repairs to stone and stucco.
-
Testing a New Budget:
- Prospective buyers are advised to create a new house budget and live with its expenses for a period before making a purchase. This "test drive" helps in understanding the financial implications.
-
Affordability of a Larger Home:
- The article suggests evaluating one's debt-to-income ratio to determine how much more mortgage can be comfortably afforded, considering additional costs like maintenance and property taxes.
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Investment Considerations:
- Buying a larger home is discussed in terms of its impact on mortgage payments and property taxes, with the return on investment (ROI) depending on various factors, including real estate trends and location.
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McMansion Definition:
- A McMansion is defined as a large, often ostentatious, mass-produced builder's house. The article notes their resurgence in popularity during the COVID-19 pandemic as people sought more space inside and outside.
In conclusion, the article provides a comprehensive guide for individuals considering the purchase of a larger home, covering financial considerations, maintenance obligations, and potential pitfalls.
