For several decades, Americans have aspired to own ever-larger houses. But housing experts say the trophy home is now gradually losing some of its luster.
More consumers at all economic levels are talking about the emotional and even spiritual advantages of living more simply. It’s not only cash-tight seniors on fixed incomes who intend to downsize. Even Bill and Melinda Gates, among the wealthiest philanthropists in the world, said recently they plan to one day live in a 1,500-square-foot house.
For one thing, the new federal tax law has reduced the deductibility of local property taxes, making it less financially advantageous to own an oversized place, especially in high-tax areas. For another thing, more young adults, along with retiring seniors, are keen on living in a walkable city center, where most properties are smaller than those in the deep suburbs.
The trend away from huge houses is reflected in the latest sales data for March from the National Association of Realtors (realtor.org). Lawrence Yun, the organization’s chief economist, says the growing preference among some purchasers for smaller living is one factor translating into slower appreciation for expensive properties.
“The lower-end market is hot, while the upper-end market is not,” Yun says.
Ashley Richardson, a veteran real estate agent with Long and Foster in Maryland, attributes the home simplification trend in part to Marie Kondo, the Netflix star and best-selling author of “The Life-Changing Magic of Tidying Up.”
Mark Nash, a long-time real estate broker and author of “1001 Tips for Buying & Selling a Home,” says what he calls “the McMansion era” is gradually losing favor.
“With the environment in mind, living smaller is the ‘new normal’,” says Nash, who’s based in both Illinois and Wisconsin.
Still, the reality is that buyers are of mixed minds about the desirability of owning an oversized property, especially at a time when the economy is faring well. Just as large SUVs remain popular, certain home features -- like three-car garages and expansive home offices -- continue to attract buyers.
“This is a classic case of ambivalence," Nash says.
Here are some tips for buyers pondering how small they should go:
-- Clarify the difference between your housing wants and needs.
Nearly all buyers have to make trade-offs when they purchase a home. Unless you’re wealthy, you’ll need to set priorities.
“Making a priority list is the absolute key. You have to decide what features are most important for everyone living in your household. Your best home style is going to be determined by your lifestyle,” says Sid Davis, a Utah real estate broker and author of “A Survival Guide for Buying a Home.”
If you’re married or living with a partner, Davis recommends you sit down with the other person and each rank your housing priorities. Then compare notes and if there are differences, compromise.
-- Reflect on whether you truly need a large house for entertaining.
Among buyers who seek a spacious home are those who love to throw large parties and family gatherings, as well as people who believe that home entertaining is central to the fulfillment of their professional obligations.
“I know CEOs who think they must have a very big place to show off to clients or colleagues,” Nash says.
If home-based entertaining with large events is something you value highly and you’re comfortable with the payments on a big property, why not go for it? But if you’re interested in the financial benefits of living smaller, Nash suggests you consider some less expensive options for your parties.
“Why not take your guests to your favorite restaurant and rent a space for your parties?” he says.
-- Don’t underestimate your realistic need for storage.
Davis says many buyers like big houses because they place a premium on lots of storage space. Assuming you can afford it, Davis says buying a large house for extra storage space could be a reasonable idea. After all, a large house could save you a significant sum over the rental expense required for the long-term use of a self-storage unit. But he cautions against the assumption that a large house will allow you to keep accumulating ever more possessions without a problem.
“No matter how much storage space you get in a big house, you’ll eventually need to stop shopping or clear through the accumulations you already have,” Davis says.
-- Consider moving soon, whether you plan to buy a small or large home.
“There’s no one-size-fits-all for all home purchasers. What’s right for you depends on your family’s needs and lifestyle aspirations," Davis says.
Relative to historical norms, mortgage rates have so far stayed unexpectedly low this year. But no one -- not even top economists -- know when that might change. And for many purchasers, rising rates mean reduced buying power or a potentially smaller down payment, or both.
Regardless of their plans or financial limitations, Davis says many buyers could do well to expedite their moving plans if they intend to buy a new place this year.
“Whether your family is seeking to upsize or downsize in 2019, this could be the time to go for the gold,” he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)