As statistics make obvious, the rich are getting richer. So, too, are the homes of the well-paid getting richer with amenities. That's according to the National Association of Home Builders (www.nahb.org).
A survey by the builders' group shows that newly constructed homes are growing in both size and price. Most now have at least four bedrooms, a three-car garage, a front porch and a patio. They have gourmet kitchens with granite countertops, a double sink, a central island and a linen closet. What's more, their ceilings soar to nine feet or higher.
But these swanker homes also require a higher income than in the past. In the current era of stringent mortgage lending standards, the median income required to buy a new home in America has ascended from $91,768 in 2005 to $107,607 in 2011. That's notwithstanding the decline in overall housing prices that occurred during the worst years of the recession.
"The lion's share of income gains has gone to the top. At the same time, people in the middle are spending much more for housing," says Robert H. Frank, a Cornell University economics professor and co-author of "The Winner-Take-All Society."
Is your middle-income family willing to make economic sacrifices to obtain a brand-new property? Yet, do you want to stretch your dollars in such a way as to avoid the kind of financial pressure that faces an increasing number of middle-income earners striving for a high-quality home?
If so, James W. Hughes, a housing expert and dean at Rutgers University, urges you to look beyond your monthly mortgage payments when determining if you can afford a given property.
"With rising property taxes and costs for home improvement services, you have to be concerned about the operating costs for a large space,” Hughes says.
To get a spacious and well-appointed home, some home-buying families are still willing to move to an outer-tier suburb where prices are lower on a per-square-foot basis. Yet, at the same time, an increasing number of buyers now have a strong preference for a home located near their job or one located in a "walkable urban center," says Christopher B. Leinberger, chair of George Washington University's Center for Real Estate and Urban Analysis.
Leinberger talks about a long-term "structural transformation" in real estate values that he projects will favor housing units which are conveniently located, while weakening relative values in more remote communities.
Are you determined to avoid becoming "house poor" BUT would you like to buy as large a home as possible in a relatively close-in area? In facing these tough trade-offs, these pointers could prove useful:
-- Assess the indirect commuting costs of any home you'd like to buy.
Hughes say too few homebuyers take into account how much their commuting costs could increase in the future.
"Cars are becoming more energy-efficient, but an increasing number of jurisdictions are charging tolls for highway use. Also, fares for public transportation are steadily rising," Hughes says.
If possible, he encourages homebuyers from a dual-income household to look for a property from which at least one spouse could walk to work or commute by public transit. That way, the household could reduce to a single vehicle, thereby saving a substantial sum on gas, insurance and car-related fees.
-- Factor in utility costs for the home you'd like to buy.
Granted, America is moving toward energy self-sufficiency, and some analysts are projecting a decline in the utility costs that homeowners will face in the future. But many homeowners have yet to see any reduction in their bills, Hughes says.
To avoid any utility-cost shocks going forward, Hughes strongly recommends that those shopping for a property look for energy-saving features, including double- or triple- pane windows and extra insulation.
Hughes recommends that anyone buying a resale property ask the current owner for two to three years' worth of utility bills to track the trend on these costs.
-- Consider upkeep expenses.
Those who buy a brand-new house from a builder with high construction standards can typically expect relatively low repair and appliance-replacement costs for five to 10 years. But chances are, you'll be less fortunate if you choose an older home, which could be especially pricey to maintain if it's large.
"Suppose you need a new roof for that older house, or a brand-new cooling system. You have to be sure you'll have money for those costly expenditures," Hughes says.
He also advises you to think twice about the upkeep costs of owning a house with a lot of wood trim and siding, which will likely need extensive repainting every few years.
One way to gain help in approximating future upkeep costs is to be sure that your home inspection is done by a well-trained inspector. One source of referrals: the American Society of Home Inspectors (www.ashi.org).
Are you contemplating a property with a large yard and expecting to hire a landscaping service company to keep up the grounds? In that case, Hughes says you can assume the cost of yardwork will increase in coming years.
-- Examine the trend for homeowner association fees.
Whether you're planning to move to a gated community in the suburbs or a condominium building in a city setting, the odds are you'll be subject to a monthly fee to cover the costs of maintenance, security and other common expenses.
But before you commit to any property with a monthly management charge, Hughes says it's wise to obtain detailed information on the history of these fees going back several years. That will help you determine if inflation has been a factor pushing up these charges -- a trend that could well continue indefinitely.
"You can assume homeownership will be more expensive going forward. So be super-careful to calculate all your costs and make sure you are very conservative in your estimates," Hughes says.
(To contact Ellen James Martin, email her at email@example.com.)