Upgrading Your Home: Want vs. Need
Posted on August 22, 2007
How do you know when it is time to upgrade your house? The average length of time spent in a home seems to have decreased over the years. I know very few people my age that do not move a few times before settling down, along the way buying and selling a couple of homes. I have owned my home almost five years, and it is the perfect size right now for me and my girlfriend. However, it is an older home that is missing some of the latest amenities as well as items we see as being necessities in the future. The amenties we would want include walk-in closets, two car garage, sprinkler system, energy efficiency, and the list goes on. The items we think we need include a third bedroom, a second bathroom, and a larger living area with dining room. We have a small space so we feel we need more space to entertain family and friends as well as to have a family of our own in the future. My girlfriend and I have been discussing when the appropriate times are to upgrade a home and when is it best to stick it out. Obviously everyone has their specifics of when they plan to move, and with the exception of job changes you could probably live in a moderately sized house forever. So when is it time to save up and make the leap? For our specific case, we are thinking another 4-5 years and we will be ready, with both enough down payment and home equity. However, we are comfortable with our location and size that we could stick it out longer in our house if necessary. Changes in life stages seem to be the most frequent cause of home changes. Here are a few life stages followed by the wants and needs of upgrading a home at each stage:
Twenties. The typical needs of this stage are to purchase a home if you have not done so yet. The wants include emotionally shopping for the largest and best located home you can find and doing whatever it takes to get into that home (adjustable rate mortgages). Limiting the want of going above your budget (by using adjustable rate mortgages) to have the best home is very challenging and is the goal in this stage. Develop a price point at which you can afford and stick to it no matter how much more house 20K extra will get you. At this stage as a first time home buyer I was very anxious to get a home and was not always thinking about where I was going to be in five years. You don’t have to buy the home you will have for the rest of your life, but be aware your twenties can be very transitional. Buying the trendy loft apartment in the best part of town may sound like a great idea, but if you have to sell in a year and take a loss that can hurt.
Thirties. The most common needs of this stage include ensuring there is enough living space to start a family and entertain extended family from time to time. Other needs will include living in a decent school district and a child friendly neighborhood. The wants of this stage include extra amenities such as a pool, three car garage, large lot, waterfront property, and lots of square footage.
Forties. The standard needs of this stage involve maintaining your current home, ensuring resale value is held. The typical wants of this stage include extravagantly remodeling the home you are in or moving to a bigger, better, and newer home.
Fifties. Most likely you are becoming an empty nester at this point and your kids are off to college or out on their own. The needs of this stage include potentially downsizing your home to something more suitable to life without kids as well as moving to the home that will be conducive for retirement. The wants of this stage are to build or purchase your dream home. You have worked your whole life and tell yourself you deserve everything you have always wanted. Retirement is just around the corner so it would seem wise to me to plan for that prior to locking a significant amount of money into real estate. But that is just me, I have not got to this stage yet so I may be off base.
I have talked with some fellow bloggers to get their opinion on the wants and needs of upgrading your home:
Free Money Finance: “So far, the only time I’ve moved in the past was for a job transfer to a new city. I am currently looking for a new place in my town, though, and the compelling force there is the combination of wanting a bit more land and the fact that houses with land are now attractively priced with the real estate market in the shape it’s in.”
FiveCentNickel: “We’ve owned two houses. We sold the first and bought the second because of a work-related move. However, we have 4 young kids and thus moved up in size because we were running out of space.”
Zen Habits: “The appropriate time to upgrade your living space (house, condo, apartment, mansion, etc.) depends, of course, on a lot of factors: the size of your family, kids moving out of the home, a divorce, a marriage, increased or lowered income, kids growing older and needing more space, etc. For myself, my growing family has necessitated a larger living space than in the past. We simply can’t fit in a 2-bedroom duplex anymore. However, I’d like to make a pitch that may not be popular. Two pitches, actually:
1. Don’t upgrade due to increased income or increased stuff. If you get a raise, or a better job, don’t use that as a reason to move into a new and better home. Invest the new income, or use it to pay debt. Otherwise, you’ve just blown your increase in income on housing, when you could use it for so much more. And too much stuff should never justify a larger living space — get rid of stuff instead of paying more to store it.
2. If possible, decrease your living space. Regardless of your income, regardless of the amount of stuff you have, if you are able to live in a smaller space and still be fairly comfortable, I’d recommend a downgrade. Especially if your kids move out of the house, or you go through a divorce, or some similar change in your family situation. A smaller space forces you to simplify, to reduce your clutter, to only keep what’s important and essential. It also costs less, which means you can use that difference to pay debt or invest … or instead, to work less.”
Plonkee: “I think you need to upgrade when there isn’t enough room in your house for all the people that live there. Reasonable wants are probably better school system for your kids, or things that will seriously improve your lifestyle, if for example you want a garden because you love gardening or something. Believing that your own home is a good investment is a terrible reason to upgrade. Just selfishly wanting more space, is a simple want, that needs to be balanced against the needs and wants of the rest of your life - if it fits in and you can afford it, upgrade as you please. I think its a good time to downsize your house when your children have left home, you are no longer able to maintain your house, you want or need to pursue a less lucrative career, or any time that you are sure you won’t need an upgraded house within 5-10 years.”
Paidtwice: “Our last move, from our apartment to our house, we determined we had a *need* to upgrade after our second child was born. We were living in an 800 sq ft two bedroom apt (with one additional common room) and literally, there was no space for all of our belongings. I began to feel depressed and anxious all the time and like the apartment was closing in on us. Our bedroom doubled as an office (I work from home) and tripled as a nursery. The environment was literally making me miserable. I am not saying it is not possible for 4 people to live in 800 sq ft happily. It just was not possible for me. But, here’s the *want* part. We bought a 4 bedroom, 1800 sq ft house. Did we *need* that much space? No. But we wanted it. I think it was a reaction to our past crowded quarters. We did not buy above our means or anything and have a 30 yr fixed mortgage that fits with our income, but we could have bought a 3 br with 1400 sq ft and been in enough space. But we’re glad we bought what we did, regardless.”
No Credit Needed: “I live in a home provided to me by my employer. So, the only reason that I would move (into a bigger or smaller home) would be if I changed jobs/employers.”
Frugal Underground: “For my husband and I, housing is the area where we make the biggest progress towards our financial goals. We take kind of a reverse pride in being in the smallest house in our subdivision, just because we know that we’ve also probably got the smallest mortgage in the subdivision. Realistically, the only reason I could anticipate for us to move within the next decade or so would be a job and city change. We are very happy with our home, and would much rather spend the money on bikes or the local ski hill, so even if we were to move, I think the goal would be to find the smallest we could be happy with.”
Lazy Man and Money: “We decided it was time to move when my wife got a military promotion. We neither upgraded or downsized our home.”
For even more reading check out: Is it time to remodel — or buy a new house?
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I’ve only upgraded once, after I got married and we started our family. We THOUGHT this was going to be a starter home (2 BR, 1 bath). But after my late husband got sick and it was obvious that we would be a one child family, we decided to stay put.
I was VERY glad we did. I was able to continue to pay off the mortgage on a single income and now I own the house free and clear.
It was a perfect for two, a bit crowded for three when one was a young teen, perfect for a single mom and one child, and a bit big for me by myself.
I may downgrade when I retire, or I may just stay right here. Small houses are wonderful.
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