I’ve moved five times since college. With each move, I have sought the advice of a local realtor. They have provided important insights into neighborhoods, housing trends, and home prices. And each time, they have taken a genuine self-interest in my family’s well-being. In fact, I’m still friends with almost all of them.
Our interaction typically begins with a series of questions: What are you looking for in a home? Are there any specific locations you have in mind? Are you pre-approved for a loan? How much are you looking to spend?
With this information, a realtor is prepared to make recommendations and offer advice—usually based on the dollar amount a buyer wants to spend.
Too often in this scenario, “What can you afford?” replaces “What do you actually need?” as the starting point for most home buyers. Rarely do people begin the home buying experience with a list of needs alone. Instead, they come armed with a pre-approved dollar amount, set by the bank, of how much they can afford to pay each month. This rationale has gotten us into deep over-housing problems, on both a macro and micro-economic level.
The housing market today in the USA is pushing prices to an all-time high. If you are in the market to purchase a home, I want to offer you the most important piece of home buying advice you’ll ever hear:
Buy only the home you need, not the house you can afford.
Too often, when people begin the home buying experience, the mantra of our society comes calling, “buy as much and as big as possible.” It seems, whatever dollar amount the financial institution has approved to spend on a home becomes the price range they begin searching in—usually choosing a home at the upper limit of the range.
For example, if based on income, a buyer is pre-approved for a $350,000 loan, most buyers begin searching for the biggest house they can find for exactly $350,000. This thinking can even be encouraged by the realtor and the financial institution. And why not? The larger the sale, the greater their profit.
Buyers soon create a list of “wants” for their new home while “actual need” is quickly erased from the formula. Once you tour a $350,000 home, it’s really difficult to be content buying a $250,000 one.
In purchasing homes, we are told repeatedly (in both subtle and not so subtle ways) that “bigger” and “more” is better. As a result, the average American home has tripled in size in the last 50 years—and they only continue to expand. With little regard for the negative consequences, buyers continue to purchase bigger and bigger homes, whatever size their income allows.
But the impact of this thinking has detrimental effects on our well-being. We typically use only 40% of our living space with any regularity. Meanwhile, the increased debt contributes to mental and emotional distress. And the excess space carries additional financial costs—whether we are using the square footage or not.
More is not always better. There are actually some fabulous benefits to living in a smaller home. A smaller home is easier to maintain, less expensive, assumes less financial risk, results in less environmental impact, and frees up our resources to pursue other passions in life.
We made the mistake of buying bigger and bigger houses with each pay increase during the first decade of our marriage. It wasn’t until I was introduced to the benefits of minimalism that we eventually downsized into a smaller home—a decision we have never ever regretted.
Buying a home is a very personal decision that weighs a large number of factors. And only you know all the variables that come into play when making that decision.
But too often, the most important piece of home buying advice is the one we never hear:
Buy only the home you need, not the house you can afford.
Kathleen Newcomer says
Great Article
I’m thinking about downsizing. n you Article really opened my eyes
My husband built our home n he passed 81/2 yrs ago so was unsure what to do
Now it’s getting much for me. Beautiful two story with large inground pool n rooms are lager then standard. Sits on 8 Acres
So gave Mr some incentive
Thank you, kathy
Laura says
Thank you. Brill advice. I have only moved 4 times in my life. I have had 2 homes since being married. The last one we bought 22 years ago. we are still here. 3 months after buying it my husband’s job was made redundant.
Over the years I wanted a bigger and ‘better’ house but we knew that if my husband was ever made redundant again we could afford this one without me having to work. Now the children are leaving home this is still the perfect size. And the garden only requires me a few hours a month and still looks beautiful. Every day I am grateful for my lovely house. And it really is fab.
Jo says
It came to my mind is that the feeling of how much we need can differ very much. In a big city, where space is rare, a 60qm flat is very big, but on the countrysite the houses are bigger. Where we lived before 90qm for 4 people was seen normal, while here, where we live now, 120qm (sqaremeters) seems minimum. We talked to someone from a asian megacity where a flat as big as our flat would have cost a fortune there…. So like with trends our feeling towards how much we need changes too with what is seen as normal… So to me the question: How much do we need? Is difficult to answer. If we had to, we would survive in one small room as a whole family…we are going to move from a flat to a house with a big garden. I am looking forward to it, because during coronavirus it sometimes seemed very cramped inside the flat. We wouldn’t need the house, we live ok here too, happiness is dependent on other things. But i still look forward to it.
Jessalynn Jones says
I can’t agree with you more Joshua!
Actually I have never bought a house yet. When my husband and I got married we moved into a 400 square foot studio apartment. We thought about moving but everything seemed like more than we needed and we didn’t want all the burdens that come with homeownership. We really appreciated that our little place gave us time and money for other things we enjoy such as volunteering and travel. We lived there for 10 years. Now we are in the master suite of my parent’s house. My parents had bought this house when they were caretaking for my grandmother but after she passed it was too big. Until we moved in half the house was only used by guests. So now that we live here we actually use all the space and it is financially freeing for all of us! Sometimes I think about buying a house now and then I just think; “What would I do with 3 bedrooms?” There is just nothing small enough out there for us lol. For now, we are happy that our minimalist lifestyle, which that 400 square foot studio apartment taught us to live, allows us to be flexible and ready for anything!
Patti Pathwalker says
Yes! Brilliant article. Living small but stylish is the goal. We’re retired and will downsize soon. We’ve 1800 sf and we very rarely use the living room or the formal dining room. The family room has a bay bump out with room for a table for 4 that overlooks the garden. Love that space. We could happily live in 1000-1200 sf…but one great feature of our current home is lack of storage. Yep, you heard that right–it keeps us honest. No attic, garage, basement and not much in the way of closets. Our move will be not too, too hard given we’ve not accumulated a bunch of stored “stuff.” We’ll be seeking a one-story, age-in-place cottage type home with some room for a garden…thanks for the thought-provoking article.
Deb Knight says
Great advice and you’ll never hear this from a realtor. And keep in mind the size of your home needs will change over time. We bought a bigger house, 2500 sq ft, when my husband and I got together because he had two tween age kids and we lived out of the city by 45 minutes. We needed two social gathering spaces since the kids brought their town friends to stay when they were with us and we both work from home so we needed office space too. We had three bedrooms with a family room (their space) and a great room (our space). The kids have grown and gone (yeah for us) and now we’re downsizing into 1200 sq ft with just the great room and a master suite. We upped the land from 2 acres to 40 acres though and are quite happy with a much smaller space. So size the house you have to the needs in your time of life.
Alyce Decker says
Be careful when painting a whole group with one brush! As a certified urban planner and a realtor one of my first cautions is ALWAYS we’re not going to be spending that whole amount you got approved for… rather let’s start at what you need, what would be nice to have and what you don’t are about… gets everyone on the same page fast!
Betsy says
When we looked at the house we live in now our realtor thought we were joking when we said this is the one. It’s 950 square feet, enough for my husband and I and our hobbies. We were downsizing from 2100 sq. ft. and almost 2 acres of land. We have great neighbors where we are and the area we live in has walkability. Our realtor is still asking if we’re ready to sell for something larger.
Lili says
I am always tempted to buy a bigger house. I have 3 children and sometimes our 3 bedroom 960 sq ft home seems too small. What we don’t realize is that we use every room of the house comfortably. I have spent thousands updating our home to our needs, our backyard is perfectly fenced, our basement has enough storage, and even though we struggle with one bathroom I still love my house. I bought the house as a single mom a few years ago and it was what I could afford at that time, now I can upgrade to a bigger home. It makes nostalgic to think of all the memories I’ve made in this house and how happy and comfortable we are living here. Something tells me I should stay and other times I just want to move. It’s a really tough decision.
Niki says
This is a great tip Joshua. The trouble I’m finding, looking even at house plans for a smaller home; is that the designers do not maximize the square footage. This leaves dead space that could be wisely reorganized for practical and functional use.
I enjoy these articles-as I prayerfully gear up for finally becoming minimalist.
Valerie Rogers says
Always live below your “means”, then you have a buffer. Means can change due to unforseen events. I’ve had several houses; they’re 4 walls and a roof to hang a hat, cook, sleep… I want very minimal to care, pay for. As little as possible, in fact, else be enslaved to the system.