Buying a Bigger House? How to Choose the Right Size for Your Family

Buying a bigger house is always better — or is it? Visions of ample space for your active family, including multiple generations to work and play sounds like a dream. However, there are many factors to consider before packing up the moving van and living large.

Real Estate Agent Madalyn Suits, who has sold more homes quicker than 61% of agents in Atlanta, Georgia, along with our extensive research, explores the pros and cons of upsizing.

Reasons you may need more space

According to Suits, the most common reasons people consider buying a bigger house include:

• Relocating aging parents or a parent that has become recently widowed
• Accommodating a family member who needs a first floor bedroom
• Housing for a young adult child living at home to save money
• Additional entertaining space for large family gatherings

Preference for larger homes expanded in the early 2020s, as more families stayed together at home, making a bigger house an attractive solution to enable working from home. When buyers were considering a move, Suits often encouraged them to calculate the space they needed along with all the additional costs when buying a larger home.

“What we really like to do is break it down to people and say, hey, what is important to your family? Is it really space or is it how you use the space?”

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How to determine the “functional” square footage

Suits would often help the buyer consider if they actually needed more square footage or if a different configuration was a better solution without dramatically increasing the costs.

“With the square footage of it, it might just be that you need to lay out the space differently or that you don’t have what we call wasted space.”

According to Suits, each buyer has different needs for their space and may just want additional bedrooms, for example, but not more square footage. She also said some houses may include the basement in the square footage calculation depending on where the house is located and whether the basement is finished.

In other words, thinking about square footage alone isn’t enough; you should think about what needs and functions your home will have to fulfill.

Costs that can make a bigger house more expensive

A larger house is usually going to be more expensive because there is more space that needs to be maintained. Areas that typically contribute to increased costs include:

• Increased mortgage payment (due to higher interest rate and insurance)
• Overall maintenance of the house and systems (such as heating and cooling)
• Higher utility bills (water, electricity, and sewer)
• Higher taxes (usually based on the square footage and amenities)

Mortgage costs

Typically a bigger home has a larger price tag, all else being equal. According to Suits, some people decide to move to other states that could give them more square footage and not increase their costs.

“If you’re coming from California to Atlanta can get you a lot more house for the money, but again, it’s more upkeep, it’s more furniture you have to buy,” says Suits.

Interest rate

A big concern for many buyers over the last year, was the increase in mortgage interest rates. According to The Mortgage Reports, the average 30-year fixed interest rate in 2022 was 3.22%. As of January 5, 2023, the interest rate was 6.48% which is an increase of 3.26%. This difference means buyers will pay hundreds of dollars more per month, and thousands of dollars more in interest costs over the life of the loan.

In the example below, you can see how much of a difference the interest rate can make, even when everything else about the homes and mortgage are identical:

Each month, the difference in mortgage payments between Example A and Example B comes to $631.01 — an additional $277,164.94 over the life of the mortgage.

For many homebuyers, this fact alone has helped decrease the desirability of buying a bigger house in 2023. HomeLight’s Top Agent Insights for New Year 2023 also found that increased interest rates are making small, starter homes more competitive while the inventory for move-up single family homes will likely increase due to these shifts in affordability.

Home insurance

Generally the larger the home, the more home insurance will be needed to cover the cost for the additional square footage, furniture, and heating systems. While quotes often vary by state, the average cost is approximately $2,777 per year according to insurance.com. Also, additional features that a larger home may already have, such as a security system with a wired smoke detector could offer discounts toward an increased policy amount.

Property taxes

Property taxes are typically based on the assessed value which is determined by the area where the property is located and the property tax rates that have been approved by the local government. This funding is often used for schools and public safety.

The assessed rate is usually a percentage of the fair market value and can vary depending on the cost of the home.

The more expensive home would typically be larger and have a higher tax bill. Tax exemptions may be possible if your county offers programs for seniors, veterans or people who have disabilities, and who also meet other eligibility criteria.

Utility costs

A larger house with more bedrooms and living areas that need to be heated or cooled can increase your monthly utility costs. Suits recommends finding out from the seller the average monthly costs for the larger home you want to purchase as a good way to estimate how much more it will be.

“Because again, I mean, if you went from $300 a month in water to $1,000 a month, that’s a massive increase in your water bill.”

Suits continued to say that different counties could also have varying utility rates. Another consideration, according to Suits, is how much mortgage payments have increased since last year and also how the higher utility costs were less noticeable because the mortgages were less expensive.

Utility maintenance

According to Suits, a larger home can sometimes have a more complicated heating and air system with multiple units that need to be maintained regularly.

“I had a client one time, I mean it was a big house, we were under contract and we went through the inspection, and they had six heating and air units. And my client was like, ‘I don’t want to maintain those,’ and we walked.”

According to Angi, the average cost to repair one HVAC system is approximately $350 and if six units need to be repaired at the same time that could cost an average of $2,100.

Other factors that can raise housing costs

• Newer construction or recently remodeled – when a house is new construction or recently remodeled it usually has energy efficient features such as windows and heating.
• Tool belt not needed – perhaps you don’t have time or money to do any remodeling, it may be worth the cost to buy a bigger home that already suits your needs.
• Additional help – a bigger house might require hiring additional help in order to maintain it because you don’t have the time, energy or expertise to do it all yourself.
• Amenities – if you are required to pay an HOA fee that may include amenities such as a community room, gym or pool that could give you more space closer to your home.
• Lifestyle – buying a bigger home may be something you want to do in order to enjoy a better lifestyle, and may not be just for additional space.

Remodeling instead of buying a bigger house

If you decide to stay in your existing home, remodeling may be a nice alternative to find ways to better serve your family without having to move. With many people working from home, finding a dedicated space for a home office that is quiet might be the solution, such as:

• Going up – adding a space above the garage or a second story.
• Going down – refinishing a basement that can be a quiet retreat.
• ADU for you – an accessory dwelling unit that stands alone in your backyard.
• Repurpose – a spare room or large closet could be transformed into an office.

Bottom line for buying a bigger house

Decide on needed space – consider if you need more bedrooms, an office, or outdoor space.

Add it up – know what the total costs will be for mortgage, utilities, taxes, and insurance.

Look for discounts – such as tax exemptions, insurance discounts, and community amenities.

Consider expansion – compare the cost of remodeling versus buying a bigger house.

If you are looking for a top local real estate agent who can find a bigger house to suit your needs, consider using HomeLight’s Agent Match.

Header Image Source: (Jesse Roberts / Unsplash)