Have Americans Already Changed Their Minds on Buying Big Homes?
Time heals all wounds, even those inflicted by the worst housing bubble in modern history. The McMansion pandemic of yesteryear exemplified what happens when a cocktail of greed, cheap credit, and ignorance mixes together. That is, Americans who indulged in excessive house consumption quickly learned the true meaning of being “house poor.” But yet again, only a few years removed from the housing crisis, some Americans are already longing for bigger homes.
The majority of Americans are not living in a home that is the size they want. According to a new analysis from Trulia, only 40% of respondents say they are living in a home that’s their ideal size, while 43% believe their dream home is somewhat or much larger than their current residence. Only 16% say their ideal home is smaller than their existing home.
Several factors influence whether people desire a different-size home, but every generation as a whole shows a bias toward a larger home. Baby boomers might have an empty nest and be nearing retirement, but more would still prefer to live in a larger home than a smaller one, represented by a slim five-percentage-point difference. Millennials clearly want a larger home, with 60% saying their ideal residence is larger than where they live now, compared to only 13% who would rather downsize. Generation X, defined as people 35-54 years old, also wants a larger home, with 48% saying their dream home is larger than their current residence.
On the positive side, 38% of respondents from Generation X say they are happy in their current residence. However, this generation faces increased risk for those who do decide to move into a larger, more expensive home. On average, these are our peak-earning years and the final years to set aside substantial retirement funds. Committing to a larger mortgage could end up being detrimental.
A recent report from the Consumer Financial Protection Bureau finds that the so-called golden years are being weighed down with mortgage debt. From 2001 to 2011, the median amount of mortgage debt carried by homeowners over age 65 surged 82%, from $43,000 to $79,000. The percentage of homeowners over age 75 with mortgage debt nearly tripled during the same period.
While it may feel like a larger home in your peak-earning years is warranted, you still need to make sure you can afford it without neglecting other areas of your financial life. The grass truly is always greener on the other side. Trulia finds that 25% of people living in homes larger than 3,200 square feet still want to super-size their residence.
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