Should I buy a bigger house?

If your home has begun to feel a little too cramped or you’re planning to expand your family, buying a larger home may seem like the ideal solution. But bigger homes also come with bigger costs — and not just the increased monthly mortgage payments. Before you make the leap into additional square footage, be sure you understand what you’re getting into. Here’s a breakdown of what to consider.

Is buying a bigger house a good idea?

There are many reasons why a bigger home might seem like exactly what you need in your life. Perhaps your family has grown over the years, or you have parents or extended family who need to live with you as they age. Or maybe you’re one of the many Americans who now work from home, and you need space for a home office. You may also simply be earning more money than you were when you first bought, and find that you can now afford a more spacious home or more luxurious amenities than you could then.

“Buying a bigger house can be a smart move in several scenarios,” says Erin Hybart, a real estate agent in the Baton Rouge, Louisiana area and creator of the platform Re-Erin. “It’s a great idea if your family has grown or your current space no longer suits the functions of your life. Upgrading could align with your evolving needs.”

If you can afford it, that is. Before you start looking at houses, look into all of the expenses that come with an upgrade. No matter how cramped your current home feels, a bigger one may not be the best solution if your budget is not able to stretch any further.

Costs associated with a bigger house

How much house can you afford to buy? Beyond the home’s actual list price, you’ll need to budget for a long list of increased expenses that come with larger homes. For starters, your mortgage payments will almost certainly be steeper. Other costs that are likely to be higher with a bigger house include:

• Property taxes: Property taxes have been steadily ticking upward in the U.S., according to an analysis by ATTOM Data. The average property tax bill for a single-family home in the U.S. increased by 1.8 percent in 2021 and another 3 percent in 2022, it shows. Property tax rates vary by state, but the average for a single-family home in 2022, the last year for which there is complete data, was $3,901.
• Homeowners insurance: The cost of homeowners insurance varies based on many different factors, one of which is the square footage of the home. Your monthly premium is likely to be higher for a larger home.
• Utilities: Bigger homes require more electricity to light, more natural gas to heat in winter and more AC power to cool off in summer. Water bills may also be higher with multiple bathrooms.
• Maintenance: With bigger properties come bigger maintenance bills, too. Expect to spend more on day-to-day upkeep, whether it’s landscaping and mowing a spacious yard, plowing snow from a long driveway or painting more square feet of wall space.
• Furnishings: When you have more rooms and more space to fill than before, don’t forget to build the cost of additional furnishings into your budget. The total here can vary widely based on what type of decor you select.
• Cleaning: Bigger homes mean more space to keep clean. And if you opt to have professionals do the work for you, you can expect to spend more: Many cleaning companies charge based on the home’s number of bedrooms and bathrooms, while others charge per square foot.
  

Alternatives

Buying a bigger home isn’t the only way to address your evolving space requirements. You might also consider remodeling your existing home to create more space. This could include building an addition, converting a basement or attic into usable living space and more. “Sometimes, the solution isn’t more square footage but better utilization of your current space,” says Hybart. Here are some space-creating alternatives to buying a bigger house.

Build an addition

In some cases, adding additional space to your current home — such as building out a new room, a new wing or even a second story — may be a better option than moving. Doing so is likely to increase your home’s value and could be more cost effective compared to the mortgage and taxes on a bigger home. This option may have other benefits as well, including allowing you to stay in a neighborhood you love or a school district that you prefer for your children.

The cost of this type of project will vary significantly based on the scope. Second-story additions in particular are not cheap or simple. “Adding a second story might seem straightforward, but it requires checking structural support and can be more costly than first-floor expansion,” says Hybart. In addition, Hybart says, single-story homes may not be able to support a second story without modifications to the home’s foundation or ceiling support.

Convert an existing space

If your home has a basement, attic, garage or screen porch that’s not being used, converting it into livable space is another option worth considering. This can be accomplished without having to alter the footprint of your home and, like an addition, is likely to drive up your home’s value.

The return on investment for this type of project can be high, according to the National Association of Realtors’ most recent Remodeling Impact Report: While you might spend about $57,000 on a basement conversion, the report found, the finished project had an 86 percent cost recovery. An attic conversion to living area scored 75 percent cost recovery, and adding a new bathroom scored 63 percent.

Add an accessory dwelling unit

Accessory dwelling units, often abbreviated to ADUs, have become a popular option across the United States, especially in places where housing inventory is severely limited. These are functional living quarters near but separate from the main house — you may also hear them referred to as a granny flat or in-law suite. Typically, an ADU is a stand-alone structure built somewhere on your property (usually in the backyard). But it can also be an attached unit, or even a garage or basement conversion. “Building an ADU can redistribute functions,” says Hybart. “These options can enhance your living space without the full expense of moving.”

Find a real estate agent

A real estate agent can be a key part of making the transition to a larger home that fits your family’s needs and budget. A local agent who knows the market well can help you market and sell your current home while you look for another, bigger home.

When looking for a real estate agent, be sure to interview at least two or three candidates to find someone you feel comfortable working with. You can also ask friends or relatives for a reference if they’ve had a good experience with someone.

FAQs

• Is it better to buy a bigger house or add on to my current house?

  The answer depends on your financial picture and your long-term plans. If you’re looking to upgrade, it’s important to crunch the numbers and draft a realistic budget for a bigger home that includes all the increased expenses you will encounter besides just the purchase price. It’s possible that expanding your existing home will make more sense financially, and it may even be preferred if you love your location. Remember, too, that buying a new home requires financing at today’s high mortgage rates, which reduces your buying power.
  

• What are the drawbacks of owning a bigger house?

  A bigger house can take a much bigger bite out of your monthly budget. In addition to the increased monthly mortgage payment, a number of other expenses are likely to increase along with the size of your house, including your property taxes, utility costs and homeowners insurance.