There are few things more exciting, scary, or confusing than purchasing a new home. It is quite likely the most emotional purchase you will ever make. Even highly intelligent, well-adjusted people become completely irrational during the process. It is not that ancillary matters should not be taken into account after the big things are settled. But the process of buying a house quickly devolves into carpet color, kitchen arrangement, and the size and placement of the closet in the master bedroom. Far too many houses are chosen for details like these, than for the three things that really matter in the long run.
Here is a simple rule that everyone knows, but immediately discards the moment they start house hunting: If you can’t afford the house, don’t buy the house. We go into the process with an idea of what we can afford. The very first house a real estate agent shows us is one that is above the range we have set. We participate in the game by reasoning that it won’t hurt to just take a quick look. The moment we make that rationalization is the moment we abandon the rule. Our emotions have taken over the process.
Rather than asking ourselves how much we can afford to spend, we can change the psychology of the situation by asking how little we would like to spend. Things dramatically change when you let price be decided by your miserly desire to save, rather than your maximum estimated spending power.
Veterans should start looking more seriously to find out about programs like Low VA Rates for Veterans. Similar sites and programs will exist for government employees, first time homeowners, and families with low incomes. Find the discounts and savings that are available for your specific demographic. Don’t leave free money on the table. When you decide to spend as little as you can, you will simultaneously prioritize saving as much as you can. Don’t try to go anywhere near what you think you can afford.
How many square feet equal a livable space? The answer is, shockingly little. We know this intellectually. But we are far from knowing it emotionally. The latest census data shows that the size of the average U.S. home is 1,000sf. bigger than it was 40 years ago. Is that because household sizes have grown? No. During that time, household sizes have shrank. Our houses are bigger than ever for housing fewer people than ever.
For comparison, consider the sizes of the average home in other parts of the world. It is telling that in the U.K., the average home is a third of the size of that which we have grown accustom. In the U.S., our houses are expanding even faster than our waistlines.
This indicates that either we never ask how much space we need, or we have an extremely overinflated estimation of our actual requirements. All that unnecessary space costs us more money up front, and more money to maintain. Our grand manners are driving us into the poorhouse.
10.8M U.S. workers commute at least an hour for work. If you do not want to travel an hour to work, don’t buy a house that is an hour away from work. Do you need to be within walking distance of shopping centers, restaurants, entertainment, and public transportation? Then your home search has to be restricted to those areas. Are quality schools, parks, and a sense of safety important to you? Don’t consider homes outside of that range.
Only after you find multiple homes that satisfy price, size, and location criteria, should you consider secondary concerns like the wall color in the second bath.