A home is one of the biggest purchases you're ever likely to make — and it's not unusual to end up with some regrets. But there's one common regret that experts say can be avoided with some advance planning: buying the wrong size home.
Almost 3 in 10 millennial homebuyers (28%) have come to realize their current property is "not the right size," according to a recent Bankrate/YouGov poll. The nature of those regrets was equally split, with 14% of millennials saying their house was too big, and 14% saying it was too small.
Older homebuyers were much less likely to have regrets related to square footage. Just 16% of GenXers were unhappy about that, and only 10% of boomers. In both generations, regretful buyers were much more likely to say their house wasn't spacious enough.
Bankrate's survey didn't focus on recent home purchases, but anecdotally, real estate pros say buyers are less likely these days to buy a home that turns out to be too small or too big.
Shutdowns and remote work during the pandemic have heightened buyers' awareness, says Emily Olson, a principal agent with Redfin based in the Twin Cities. "Buyers are more educated than they ever have been in what they need in home space," she says, adding, "We spent a lot of time in those four walls and got a really good impression of what works for us and what doesn't."
Experts suggest prospective homebuyers ask themselves four questions to limit the chances of home-size regrets:
As you start your search, it's important to think about your timeline for owning the home, and what you expect your life to look like during those years, Olson says. "What does this home look like for you?" she asks. "Is this a five-year plan? Or a 15-year plan?"
That planning can help you determine how large or small a home you need, and how you want that space configured. For example, a couple looking to grow their family might not only need additional bedrooms, but may also want all the bedrooms on the same floor or level, she says.
If you expect to continue working from home at least some of the time, a "flex space" or dedicated office might be a priority.
Video by Jason Armesto
Almost three-quarters of millennials, 71%, are willing to buy a fixer-upper if that's what lets them become homeowners in this competitive market, according to a recent survey from real estate site Clever.
But if you're counting on doing a project that would add living space — say, finishing the basement or building an addition — it's crucial to get a sense of the cost and feasibility of that work before you buy, says Steve Cunningham, chairman of the Remodelers Council for the National Association of Home Builders. Contractors often do free consultations for such projects: "We would tell them maybe if this is the right house or the wrong house to do this with."
You might find, for example, that zoning regulations or HOA rules prevent you from undertaking projects that would expand your home's footprint. "You can't build so close to the street because of underground utilities, things like that," says Cunningham, who is also the president of Cunningham Contracting in Williamsburg, Virginia.
Even if a project is doable, a contractor assessment could reveal the cost is prohibitive due to materials or the particulars of the job. "How can we get plumbing to work in the basement?" Cunningham offers as an example.
For perspective, the average cost to finish a basement runs between $24,000 and $46,000, according to HomeGuide.com, depending on factors including the size and layout of the space and the extent of the work involved. Home additions have a wider range, averaging $22,500 to $74,000, the site estimates, varying by the size and type of space added.
Homeowners' top financial regret, per the Bankrate survey, was that maintenance and other costs are too high. About 1 in 5, 21%, of millennials highlighted that issue.
When it comes to homes, "size is a direct relation to cost," points out Mark La Spisa, a certified financial planner and the president of Vermillion Financial Advisors in South Barrington, Illinois. The bigger the house, quite often the costlier your mortgage, utility bills, real estate taxes, and homeowners insurance. "Be careful not to buy more than you can afford, otherwise you will be house poor," he says.
Video by Richard Washington
One rule of thumb La Spisa tells clients is to keep the home purchase price to no more than three times their annual income — although he cautions that may not work in the priciest markets. Another aim is to keep your housing costs to 25% of your income, max.
By stretching your budget to size up, he warns, "you're giving something up. Unfortunately, the first thing to go is the savings. And that's a financial disaster."
After more than a year spent largely at home, this question is probably easy to answer, Redfin's Olson says. "A lot of my buyers this year have been people who have a very different need for space after going through a pandemic," she says, and they come in to the search with a good idea of which rooms felt cramped and what kind of additional spaces they are looking for.
A common trouble spot: the kitchen, which Olson calls "one of the biggest dimension-important rooms in the house."
In most cases, real estate pros have access to room dimensions, making it easy to tell how particular spaces compare with your current home. Even so, don't skip taking an in-person tour. As Francesca Ortegren, a data scientist with Clever, recently told Grow, "Photos and even virtual tours can give you some information about the place — layout, flooring, etc. — but they don't tell the whole story."
"The flow and the size of the rooms can feel completely different in person," Ortegren said.
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