Best to Buy Smallest House?

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Hi! Happy to say I finished the mortgage process and am in my new house. Our neightbourhood is one street, tucked away by a golf course. Other houses on the street have been sold from 130k to 170k. My house is the smallest on the street, being only 992 sq ft. I paid 123k on account of it not having the space or some of the amenities that the others have (such as skylights). A co-worker told me that it's great to buy the littlest house investment-wise, but he didn't have time to explain. Does anyone know what he might have been talking about?

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For someone that moves quite a bit, having the cheapest houses in the neigbhorhood is best. Please note that cheapest d... (more)

spockones (Nov. 01, 2006 @ 8:39a) |

My wife and I bought the smallest house on the street @ 2 bedrooms & 1200 sq ft. It was great until kids came along. Now... (more)

Hankdoll (Nov. 01, 2006 @ 1:33p) |

Is the yard and house placement on the yard so it can be expanded on?<br><br>Could you add (in the future)a master bedro... (more)

tonysavealot (Nov. 01, 2006 @ 2:15p) |

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Bought more house than I can afford, can I sue the mortgage broker

Did you read this thread....

<img src="i/expressions/face-icon-small-shocked.gif" border=0>

I have read that houses historically have returned 1% over inflation...I think buying a modest place is the way to go...

You can now improve your house until it is worth the same as the others. If another owner were to improve their house by 50,000, they would be overpriced for the neighborhood.

You can put that much into yours and NOT be overpriced. People generally look to buy a house that isn't overpriced. If they can afford a $300,000 house, you'd be looking in a pricier neighborhood, not yours. That makes your neighbor's overpriced home harder to sell, theoretically.

Ahhhh, thank you very much!

Everyone here is a bulldog...

But it's good not to buy more than you can afford!

RedCelicaGT said: [Q]Everyone here is a bulldog...

[Q]

BTW, what are you? AN alien or a duck?</blockquote></blockquote>

Platypus.

maybe he meant that it's better to buy the smallest house in a great neighborhood than the biggest house in a crappy neighborhood. The good neighborhood will always appreciate faster in good times and lose less of it's value in bad times.

>>Best to Buy Smallest House?

MeerkatRN said: [Q]Hi! Happy to say I finished the mortgage process and am in my new house. Our neightbourhood is one street, tucked away by a golf course. Other houses on the street have been sold from 130k to 170k. My house is the smallest on the street, being only 992 sq ft. I paid 123k on account of it not having the space or some of the amenities that the others have (such as skylights). A co-worker told me that it's great to buy the littlest house investment-wise, but he didn't have time to explain. Does anyone know what he might have been talking about?


I agreed that not to buy more than you can afford. But it is not necessary best to buy smallest house.

It's depends on how big is your family or how many kids you're planning to have. For example, if you have 3 or 4 kids and parents to live with you, then buying a 900 sq ft house doesn't make sense.

May be your co-worker said it is best to buy a cheapest house on the block(?). Sometimes cheapest house can be one that is not over-remodelled, and/or just need some minor fixings. But not necessarily the smallest house.



Yeah, I think your co-worker was probably referring to the old adage about buying the worst house in the best neighborhood. There's a lot to be said for small space living and congrats on your little piece of paradise! We own a 1342 sq. ft. 50's cottage and I just ADORE it. It's currently being used as a rental property, but I wish we lived in it. McMansions are nice - if you have no soul. <img src="i/expressions/face-icon-small-tongue.gif" border=0>

I'll side with your co-worker on buying a smaller house than you need. I agree with the other posters with buying a cheaper house than the others in the neighborhood but this is all about expenses. The more expensive the house, the higher the payment to the bank..this will save you thousands over the life of ownership. If you were renting, wouldn't a $700/month lease be better than a $1,000/month?
Ignoring the age of a house, less expensive(and smaller) houses also cost less to maintain. A smaller roof, less property taxes, smaller utility bills, etc will keep your wallet fatter. Of course you want to invest the extra money you have to make it truly worth it.

Jonathan Clements of the Wall Street Journal has had a few columns on this exact subject. I doubt many will agree w/us.


[Q]You can now improve your house until it is worth the same as the others.


This may hold true in some markets like CA, Chicago, NY, bigger cities/suburbs, but in many markets, no matter how much you fix it up and how much money you spend on it, it will still always be the smallest house in the neighborhood and it's value will never equal up with the larger houses. and it greatly depends on what you fix up inside the house also. As the market is changing were finding were really having to rely on price per sqft and that is really being taken into account when the buyers are buying in a market like we are in. So I'd say if your in the bigger market areas that houses are hard to come by, you'll do fine no matter what. If you are anywhere else, buy it not based on what you might get out of it later but how comfortable it is for you to afford now.

Buying the smallest house on the street/in the neighborhood can be a good thing. It's what we did. Now we have a price point that is below everyone else in the neighborhood and becomes a selling feature in itself: "Live in [attractive neighborhood] for less than [$x]."

However, if it's too small for your current or expected family, you'll probably wind up moving, which means that might pay twice for transaction/moving costs (if you move earlier than you otherwise would have).

My philosophy is to buy a house bigger than you think you'll need (as long as it's within your budget). I've never bought a SFH, but when I bought a townhouse last year I had the option of buying a 2BR 1300sf for $600K, or a 3BR 1500sf (with a more open floor plan) for $650K. I went for the larger one with the better floor plan...when you're in a community with 3 or 4 different floor plans, I think it pays to have one of the most desirable. I've been keeping up with RE prices, and the units with my floor plan have appreciated ~2%, and the smaller ones have dropped 3-4%.

Bread and butter man, min 3 bedroom 2 bath with 2 stall garage. You could go higher if need be but this is the min because you want it to apeal to the largest amount of people.

QueenieB said: [Q]McMansions are nice - if you have no soul. <img src="i/expressions/face-icon-small-tongue.gif" border=0>

Classic. I live in a 100 yr old house, that is now 1400 sq ft with a small addition. I think 1000 q ft would be too small for my family. I have noticed houses 1000 sqf t and under where I am (UT) have a harder time selling.

From a personal perspective, I think buying more house than you need is a waste of space and utilities and materials (gas, water, electricity, carpet, etc). Utilites for me run an average of $90 a month (not including telecom). Less is more to me. You will save that money over time.

But hey, if that extra sq footage makes you a happier resident, so be it.

Edit: Looks like rholly beat me to my point!

Here we go with generic blanket statements ago. Compare two houses, everything compariable that are on the same street / neighborhood, what will you find? You will find that price per square foot, the larger house costs less per square foot than the smaller one.

You shouldn't compare square footage alone. You shouldn't buy a house unless it has at least three bedrooms, and at least two bathrooms. You don't want to remove a large group of potential buyers because of the amount of bedrooms and bathrooms isn't what is considered at least normal. Anything less than two bathrooms and three bedrooms is considered a 'starter' home. Personally, I have never even considered anything less than three bedrooms / two bathrooms even when it was just my wife and I.

I think the differences in cost of utilities is marginal. It's more about insulation and how efficient heating / air unit is then about square footage. I have 2600 square foot house, utilities run $300-400 a month, built in 1980. I had 1600 square foot house, utilities ran $250 to $350 a month, built in 1945. The newer house had better insulation and more efficient central heat / air.

Plus, generally speaking, one you need 1/2 ton for every 600 square feet of house.


In terms of investment property, it seems like the bigger houses increase exponentially in value during a seller's market.

i.e., the $250K McMansions of the '90s were going for $500K last year, but the $125K pillboxes were still under $200K. But now we're trending into a buyer's market, so those $500K homes are nosediving while the pillboxes are at least holding their value.

Thanks for everyone's input!

MeerkatRN: congratulations on buying a house. I hope you and your child will be happy living there.

I'm somewhat partial to the concept that you buy the nicest house you can afford in the nicest neighborhood you can afford.

More directly related to this thread though I think is that you should never buy the smallest or biggest home in any given neighboorhood, it will be out of place and harder to sell when the time comes. If you want a small house, which is fine, buy in a neighborhood where there is a choice of houses that size, don't buy the smallest house in a neighborhood where all the other houses are bigger.

Thanks Thursday!!

ThursdaysChild said: [Q]MeerkatRN: congratulations on buying a house. I hope you and your child will be happy living there.

Sorry but I have to be honest here. I wouldn't want my kids to feel like they're living in the cheapest/smallest house while his/her friends are in a bigger house. It just like driving a Yugo in the 1980's....hehe!

superbabyl said: [Q]ThursdaysChild said: [Q]MeerkatRN: congratulations on buying a house. I hope you and your child will be happy living there.

Sorry but I have to be honest here. I wouldn't want my kids to feel like they're living in the cheapest/smallest house while his/her friends are in a bigger house. It just like driving a Yugo in the 1980's....hehe!


superbabyl - actually the reverse happened to me. My kids told me they were embarrassed that we had a bigger house than their friends when they were growing up.

ferro said: [Q]
superbabyl - actually the reverse happened to me. My kids told me they were embarrassed that we had a bigger house than their friends when they were growing up.

Just wondering how old are your kids?
Kids probably too embarrased if their house is either too big or too small.



wow new homes for $130ish, If its all the house you need then great enjoy. There's no right or wrong way to buy a home. Ive been in real estate for 15 years. It used to be own the smallest house in a great location like country club and so on but not any more. Land costs are so high right now that we just demolished a brick home in Utah for $200k. The home values are 200k to 300k in this block of town but two streets over million dollar ones. So tech we are three to four times higher priced but ours is brand new 2x6 every option including steam shower 800k and expect a quick sale. The rules have changed! You could always upgrade your home and go bigger on better lot make sense. You really have done good id prefer a new home over a condo, resale is on my mind, plus your price range just about anyone could afford. During the AZ boom last three years you would have done better buying the larger new home if i remmeber correct my sister paid $162k in occotio chandler area sold for $260 two years latter and its 1200sqft the larger models 3000sqft 205k now sell $500 so?

superbabyl said: [Q]ThursdaysChild said: [Q]MeerkatRN: congratulations on buying a house. I hope you and your child will be happy living there.

Sorry but I have to be honest here. I wouldn't want my kids to feel like they're living in the cheapest/smallest house while his/her friends are in a bigger house. It just like driving a Yugo in the 1980's....hehe!

My child isn't even 2 years old. I don't think she's thinking about 'keeping up with the Joneses' right now.
Anyhow, We are 10 minutes to the Gulf of Mexico, beautiful sugar-white beaches in a GREAT school district in the upper-crust part of twon. So I think it will be OK. Plus, I've got improvement plans...Maybe an addition in the future.

superbabyl said: [Q]ferro said: [Q]
superbabyl - actually the reverse happened to me. My kids told me they were embarrassed that we had a bigger house than their friends when they were growing up.

Just wondering how old are your kids?
Kids probably too embarrased if their house is either too big or too small.


My kids are now adults, but they lived at that house for more than a decade- through their teens. From my experience, now that I downsized substantially, smaller is better.

thanks... that's awesome!

I guess a lot really depends- if you are strictly talking size or saying size and really meaning cost. And cheapest house overall versus cheapest in your neighborhood are different nuances also.

My in-laws have moved 10+ times (works for exxon) and lived in new orleans, houston, dallas, new jersey, germany, canada, etc ad nauseum) and they always advocated buying the cheapest house in the best neighborhood. Their main concern was resale. They consistantly made money on all house sells other than one (in houston when market crashed 20 years ago) and often were in a house less than 1 year! I guess the main thing is you don't want to be the only 300k house in you street when everyone else is 200k b/c your house will likely look overpriced, even if its not. Sometimes people primarily want to just get into the location (location location) in which case the cheapest house is definitely their best and maybe only shot, in which case having the cheapest house in a fancy area might really get you lots of quick nice offers. However if all prices in generaly rise an equal 20%, having the nicest most expensive house will yield the best overall $$ return-assuming they all rise equally.

They also say to avoid 'gold-bricking' a house- that is to say building up a house so that it is soo much fancier than any other house in the area- b/c peopel will be hesistant to pay 300k for a fancy 2000sqft house that is fancy when they can get a less fancy 2000sqft. house for 200k...even if it is worth it...

anyway, look around the neighboorhood and see how your house ranks to those around you...

For someone that moves quite a bit, having the cheapest houses in the neigbhorhood is best. Please note that cheapest does not always equals smallest.

You should always consider resale of house when buying it. Chances are that you are not going to stay there indefinetly, sooner or later you will have to sell.

I declined to buy 2 to 3 acres and build a house because it was out just a little bit out of the way. Instead, I bought a house built in 1980 with large lot in subdivision for $30,000 less. Which would sell faster? The house in the subdivision. In fact, the house was only on the market for 8 days when we bought it.

I got what I consider I great rate at 5.375, which was less than the 6 percent bond money I had on the house I sold. Just one word about bond money, stay away from it! If you sell your house within 7 years, you might have to pay a penalty. It was going to be around $4,000, but my income was barely below the threshold.

My wife and I bought the smallest house on the street @ 2 bedrooms & 1200 sq ft. It was great until kids came along. Now we're in the dilema of building-on vs. selling. Adding-on will cost twice as much as the variance to a 3 bedroom in the neighborhood. That means we'd only get 50% back on the addition. Or we could sell and pay $$$ in real estate fees, lose our great interest rate, and triple our property taxes. <img src="i/expressions/face-icon-small-sad.gif" border=0> Our fault for not planning ahead.

Is the yard and house placement on the yard so it can be expanded on?

Could you add (in the future)a master bedroom (with master bath) of 500sq feet (25'x 20')
and the new floor plan would not be to goofy?


When I would say you did the right thing of buying a small house.






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