As real estate recovers in many markets, more homebuyers are once again hankering for that supersized house with the circular driveway.
“With foreclosures on the wane and the economy shifting back, the bigger-is-better mentality is also coming back,” said Mary McCall, a real estate broker and president of the Council of Residential Specialists (www.crs.com).
If they can afford it, McCall said, many people now opt for a house with more than 5,000 square feet of living space and an assortment of amenities.
Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies,” said some older buyers still want to actualize a long-standing wish for a very spacious home, regardless of its practicality.
However, in most cases people have well-defined reasons for wanting an exceptionally spacious house, Tyson said.
He and his wife, who have three high school-age children, both work from home. To accommodate their lifestyle, they purchased a 5,500-square-foot house when their offspring were small.
Although many baby boomers are willing to shoulder the expenses associated with literally living large, real estate specialists say younger people have other housing priorities beyond sheer size.
“The younger generation cares a lot about its carbon footprint. For them, it’s just not fashionable to be an energy glutton with a humongous house,” said Jane Fairweather, a veteran real estate broker.
Also, she said, many young couples with children are unwilling to move to an outer-tier suburb to obtain a super-large house, assuming that purchase means a lengthy, grueling commute for one or both parents.
Are you contemplating purchasing a large home, but want to be sure the move is right for you? If so, these pointers could prove helpful:
-- Get your finances in order first.
Depending on your outlook, buying an oversized house is a solid long-term investment or a pointless money drain. With real estate values rising in many parts of the country, Tyson said more homebuyers believe that buying a reasonably priced home and holding it for five years or longer could prove a prudent choice.
But he cautions that no one should buy a supersized house without first looking at long-term budget constraints, things that mortgage lenders don’t consider when granting loan approval.
“Your mortgage lender will never ask if you’ve saved enough to send your kids to college or care for your elderly parents. But these are clearly concerns for many people,” Tyson said.
Another concern involves retirement savings. If you buy a big house, will you still have enough to live comfortably in spite of your mortgage payments?
To make basic calculations about a long-term budget, Tyson recommends the free online financial-planning tools available through such mutual fund companies as T. Rowe Price (www.troweprice.com) and Vanguard (www.vanguard.com).
-- Consider all costs associated with owning a big house.
Some big-house enthusiasts are willing to personally handle all the cleaning and maintenance tasks. But beyond upkeep costs, there are other expenses to factor into your calculations.
“In many areas, property taxes are going up at a high rate. Also, homeowners’ insurance premiums are rising,” Tyson said.
In addition, he said, you should be sure to factor in the costs to furnish, heat and cool a very large house.
-- Think through your views on the investment potential of real estate.
In recent months, home prices have started rising in many neighborhoods, though in most areas properties still sell for less than their pre-recession levels. Does that mean there are still bargains to be found in the big-home category that could justify your purchase?
Tyson said the answer to that question depends on the strength of your local economy and labor market.
“If the area where you’re looking is a popular one with low crime and strong schools, you could gain a lot of appreciation in coming years. But if the area is already overbuilt with big houses, you’ll need to wait longer to pick up value,” he said.
No matter how large a house you buy, you should stay there for at least five years to make your investment worthwhile, Tyson said. In the past, many who have held large houses for years have been richly rewarded.
-- See the big purchase in context with your overall life goals.
Michael Crowley, a real estate broker and past president of the National Association of Exclusive Buyer Agents (www.naeba.org), estimates that 90 percent of his clients buy as big a home as their budget will allow. But the rest have priorities that trump housing.
He tells the true story of a couple of clients, college professors in their 40s, who deliberately undershot their spending ceiling. They bought a 1,200-square-foot ranch-style house with a tiny master bedroom, although they could have financed a property much larger, because they wanted to have a lot of money available for foreign travel.
Through the years, he remembers working with a number of affluent clients who placed a higher priority on saving for their children’s college educations than on luxury housing. Others were willing to forgo a large house to cover the costs of expensive hobbies, such as skiing.
Of course, as Tyson noted, financial priorities are highly individual. For all who choose a home smaller than their income would allow, many others max out.
“There’s nothing wrong with buying a house that’s much bigger than you really need. If you can pay for it and are up for all the maintenance headaches, I say go for it,” he said.
Ellen James Martin, a former real estate editor at The Baltimore Sun, gives advice for anyone buying, selling or financing a home.