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In What Ways is a Bigger Home "Worth It"?
In What Ways isn't It?

Since 1950, the average house in the United States has more than doubled in size to reach an average of 2,349 square feet. No longer -- if they can help it -- will families share a bathroom as they often did in the '50s, nor will three or four kids share a bedroom.

large houses

The average U.S. home has doubled in size since 1950.

Americans buy big homes for many different reasons. For space, for status, for tax breaks, for the neighborhood (and schools), and for a feeling of security. But is a bigger home really a better investment than a smaller one?

A big home will generally appreciate in value, which means that whenever you decide to sell, you stand to reap a profit, but there are many other things to consider.

The Real Cost of a Big House

Right off the top, a bigger house will cost you more in property taxes, which are about 1 percent to 2 percent of your home's value. Utilities will also cost you more in proportion to how much bigger your home is. For instance, a house that's twice the size of your old one will likely double your energy costs.

Bigger houses also call for more homeowner's insurance, and higher premiums, and cost more to repair and maintain (figure maintenance at about 1 percent of your home's value). They may also have bigger yards (and therefore higher landscaping costs).

From an investment standpoint, bigger homes do qualify for bigger tax breaks, but they probably won't compensate for your higher out-of-pocket costs.

buying home

Experts recommend spending about 30 percent of your income on housing.

In fact, The Wall Street Journal broke down two retirement-savings investment strategies to find out which was the better option. The options were:

  • Buying a "small" $400,000 home and paying down the mortgage for 30 years while putting your savings in stock and bond mutual funds.

  • Trading your $400,000 home for a big $1 million home, paying down the mortgage, then, come retirement, trading back down to a $400,000 home and living off of the profit.

Which strategy was the winner? "The small-house strategy wins hands down," the analyses found.

How Much House is Too Much?

Ultimately, you should a buy a house that has enough room for your family so that everyone's comfortable, while keeping in-line with how much you can afford (experts say you should spend about 30 percent of your total income on housing).

Of course, what constitutes a "big" house is all relative.

"I always wanted a house big enough that my kids could be in their room screaming, and my wife could be in a room screaming, and I could be somewhere else and not hear any of them," said Michael Frisby a former White House correspondent for The Wall Street Journal about his 11,000-square-foot home.

For others, a two-bedroom condo in the heart of an urban area can feel like a castle.

What's the bottom line? Your home should fit in with your lifestyle and your budget.

"Buying a bigger house isn't an investment," writes author Jonathan Clements in The Wall Street Journal Online. "Rather, it is a lifestyle choice -- and it comes with a brutally large price tag."

Recommended Reading

Amazing Facts about U.S. Homes & Home Owners, and the Most Common Styles of Home in the USA

15 Easy Landscaping Tips to Add Appeal and Value to Your Home


MSN Money

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