Find your Goldilocks house, one that’s just right
You want to live large, but the expense may be hard to bear.
Tempted to buy the largest home you can afford? Think carefully about maxing out your mortgage payment. After all, the larger the home, the higher your principal and interest, taxes, insurance, utilities, and repair and maintenance costs as well.
Sarah McCracken almost learned that the hard way six years ago. After losing out on a house in a bidding war, McCracken, now 34 and a director at a nonprofit, and her husband, Mike, 36, a vice president at a large financial institution, considered a four-bedroom, threebath Colonial — until they read a newspaper article about the costs of homeownership. After realizing how expensive it would be to live in such a large home, they opted to size down and purchased a three-bedroom Cape Cod-style home in Walpole for $575,000. It was the perfect-size home for the couple at the time.
“We thought about being at the top end of our budget and what we really needed,” Sarah McCracken said. “Getting that forever home would have increased our utility bills, it would be harder to clean, and it had space we didn’t really need. So, we shifted gears and thought about what we needed now and what gave us the space to grow into.”
Fast forward to 2022, when the couple had a 1-year-old daughter and another baby on the way. After learning they were having identical twins, and considering, but deciding against, a move to a larger home, they elected to proceed with existing plans to add on to their present home — work completed in July 2023 that added a bedroom and full bath at a cost of $289,000. There’s now plenty of space for the family of five, plus their dog and two cats.
According to the National Association
of Home Builders, after a brief uptick in new-home size in 2021, the average size of a new home has inched smaller, dropping from 2,479 square feet in 2022 to 2,411 square feet in 2023 — the smallest average size in 13 years. That’s likely due to affordability issues as well as consumer preferences.
So how can you be sure you get a Goldilocks-type of house: one that’s not too big and not too small, but is just right for your family? With homeowners today staying in their homes nearly twice as long as they did two decades ago — the typical homeowner is spending 11.9 years in their home now, compared with 6.5 years in 2005, according to brokerage Redfin — it’s more important than ever to get the size right the first time.
Consider the hidden costs of homeownership. The everyday expenses of owning a home are higher than ever, according to a 2023 analysis from Zillow and Thumbtack. Utilities, taxes, insurance, and home maintenance can add up to $14,155 a year for the average homeowner; in Greater Boston, those costs rise to $20,879. “The larger and more complicated the house, the more maintenance it will require,” said Jack Erb, Thumbtack’s economist. “In the current market it can be difficult to find a home that fits your budget, but when planning for a new house purchase, it’s important to set aside money for essential home upkeep.”
Look to the future. Linda Shulman, a real estate agent at
The Agency in Boston, always tells her first-time buyers that they need to find a home that is not only a good fit for their lives now, but also for how they envision their lives in the future.
Will you need extra space for a home office, for example, or for aging parents to move in? She also encourages them to look at not just size, but also the location of the home. “You can always change your floor plan,” she said, “but you can’t change your location.” Make sure you have enough space to add on in the future if you need extra space. Check for setbacks that may limit your ability to make the house larger, as well as local zoning restrictions.
Consult a financial professional. Make sure you’re not overextending yourself when you purchase a home. “Don’t max out your mortgage,” said Ken H. Johnson, Ph.D., a real estate economist at Florida Atlantic University in Boca Raton,
Fla. “Being house poor is not a way to go through life.” Instead, Johnson suggested paying no more than four to six times your annual salary for a home, so if you make $100,000, you should consider a home priced between $400,000 and $600,000, he said. Granted, that may be hard to find in certain markets in the United States, but buying conservatively can help you avoid financial ruin should your circumstances ever change.