Don’t Let Ego Make You Buy A Bigger House Than You Need

I have a confession to make. I want a bigger house. With a family of four and potentially an au pair, a bigger house would provide for a better lifestyle. Now that we're spending so more time at home post pandemic, a bigger house is also much more valuable. Real estate FOMO is getting the better of me!

The question I have been thinking about is whether it is my ego making me want to buy a bigger house or practicality. I'm hoping it's because we simply want to live a better life.

I recently submitted an offer for a single family home. Why would I do such a thing, especially given I had just  gone through the difficult process of selling a single-family home rental the other year? Ego and maybe a little bit of real estate addiction.

In 2014, we downsized from a 4 bedroom, 3.5 bathroom, 2,300 sqft house to a 3 bedroom, 2 bathroom, 1,920 sqft house with a small office. Not only that, we downgraded from a well-known and expensive neighborhood to a relatively unknown neighborhood.

We took our ego squashing quest even further by buying a Honda Fit as well. With simple clothes, a compact car, and a modest house, we successfully completed our mission to go completely Stealth Wealth. It felt wonderful being nobodies!

Then things started to change once our son was born.

Ego Starts Making Me Want To Buy A Bigger House

My wife and I haven't cared about status for a very long time. If we did, we'd still be plugged into society so that we could make more money and boost our identities with our job titles.

But even with Financial Samurai, we don't actively promote ourselves because we don't care. We've always just done our own thing, regardless of whether people think we're strange or not.

In 2014, we could have bought a house 2X more expensive than the one we live in now with cash, but instead chose to purchase a 40% cheaper house. But after four years, I've begun wondering whether we should start living in a bigger house with more amenities for the sake of our boy.

After all, the median size of a new home today is about 2,400 sqft on a 8,400 sqft lot. Our house is only 1,920 sqft on a 5,000 sqft lot. Shouldn't we at least live a middle class lifestyle given we earn way more than the median household income of $85,000 in SF?

Why are we being so frugal when our lives are half over and we have a precious little one to take care of? Once our daughter was born at the end of 2019, then I really started desiring a bigger house.

Median size of a new home - a bigger house is more desirable

Stronger Desire For A Bigger House

Given our house size is below the median, by definition, most homeowners will have larger house sizes than ours. One close friend just built a sweet 5,000 square foot house and he doesn't have kids yet. Another friend remodeled his 7,800 square foot house for his wife and three kids. I live in a hut by comparison.

It's strange to suddenly care about our house size since our kid doesn't care about the size or cost of our house at all. All a child cares about is whether he'll be safe and loved and supported by family and friends. We're providing this as stay at home parents.

Maybe we've taken frugality too far. My ego is saying I've worked hard for my money and we deserve better. But my sensibility is saying we don't really need anything more than what we have right now.

Average house size

The Desire For Profit In Real Estate

The house I wanted to buy is almost 4,000 square feet with five bedrooms and four bathrooms. I saw the house as an insurance policy just in case we have another child and my parents or in-laws finally decide they want to live close to us. It's a house that I'd be proud of, no matter who came over.

The other enticing thing about the house was that at $2.2M, it was priced about 40% lower on a price per square foot basis than all other houses in the neighborhood.

The main reason was that it needed around $500,000 of work – we're talking new electrical wiring, new bathrooms, new kitchen, new windows, and probably new floors because many areas were buckled. It's also next to a haunted looking house that's been neglected. But the owner has been gradually fixing it up.

Submitting A Low-Ball Offer

Not being someone who can resist a deal, I put in a lowball offer for $1.95M all cash and figured if I won, I'd spend the next 8 months remodeling the house and be all in for $2.45M. If I were to flip the home, I could probably get $2.7M with 95% confidence, $2.8M with 75% confidence, and $2.9M with 60% confidence.

A $250K – $450K gross profit before fees and taxes is not bad for one year's worth of work. With these type of expected returns, the only thing stopping me is laziness.

If I don't flip the house, my family and I could move into this home and happily live there for the next 10 years no problem.

So no. It wasn't just ego that drove me to make an offer on this house. It was also the possibility of profit that made me want to take on this project. How could I give up so much expected profit when I don't see any other investment besides real estate crowdfunding that could potentially give me as high of a return?

Alas, despite putting an all-cash offer with a 14 day close and a lovely letter, the seller countered us at $2.3M, a $350,000 difference! There is no way we would ever pay that price, so we rejected the counter and the house still remains unsold weeks later.

Reflecting On Our Rejection: Family

I wasn't too disappointed with our rejection because the counter price had been so far away from our offer price. Besides $500,000 in remodeling cost, my contractor friend said I might have to spend an extra $100,000 for foundation work if the city passed a law that requires single-family homes to be retrofitted for earthquakes.

It's so weird how easily I could rationalize going through the pain of remodeling again. In this case, I told myself I wouldn't be as stressed. This time I wouldn't be living in the house while it was being remodeling. My wife reminded me of all the times I told her, “I swear I will never remodel or buy another fixer in my lifetime,” between 2014 and 2015.

As I reflect on this desired house purchase, I realize that immediate family played a big role in my decision. Because our house is small, housing two parents for longer than a week starts to feel a little strained. We all have our own schedules, sleeping habits, eating habits, and ways of doing things.

If I could own a bigger house with a whole separate floor for my parents to stay, I think this would be a good situation. They'd have their own kitchen, TV, living room, and bathroom. Not only could I spend more time with my parents, they could see their grandson grow up, and we can be there for them in case of an emergency. This is a scenario I've dreamed of for a long time.

I don't think anybody has ever regretted spending a lot of time with their parents.

The thing is, the best time to own a nice house is when your kids are at home. We have two little ones for at least 16 more years at home!

Benefits Of A Smaller House

Having a bigger house is nice. But it's good to fight your ego. We have a perfectly fine house for the next several years.

If you find your ego trying to get you to buy a bigger house than you really need, remind yourself of the following benefits of owning a smaller house or a starter home as some call it.

1) Fewer maintenance headaches.

The more windows you have, the more potential leaks. The more wiring you have, the higher potential for fires, especially if you have old wiring. The larger the roof, the more costly it is to replace. The bigger the yard, the more time and money needed to maintain. The more customized your home, the harder it is to fix.

2) Quicker and cheaper to clean.

Why spend hours cleaning your home when you can spend minutes? Why pay $500 to clean your home when you can pay $80.

3) Maximum utilization.

If you live in a house with under-utilized rooms, after a while you'll start feeling stupid having so much wasted space. This is partly the reason why empty nesters tend to downsize. Conversely, if you're using each room every day, you will feel like you are getting maximum value.

Map of where we hang out the most in a house
Source: WSJ

4) Less guilt traveling for extended periods of time.

Given larger houses tend to have higher ownership costs, every time you go away on vacation or extended travel, you're wasting more money than you would owning a smaller house. You won't feel as married to your house, which makes you more free.

5) Lower property taxes.

Property tax is a wealth tax that lasts forever. It makes me ill when I think that if I were to buy this new house, I'd be paying an additional $25,000 a year in property taxes while there's still massive homelessness, poor public transportation infrastructure, and a public school lottery system. I'd be so pissed if my son couldn't get into the local elementary school after paying $100,000 in property taxes.

6) More passive income.

With the price difference between the bigger house you want to buy and the smaller home you purchased, you can use that money to earn passive income. Since we won't be spending $2M on this house which we don't need, we get to earn at least $50,000 a year in risk-free income.

See: How To Building Passive Income For Financial Independence

7) No remodeling nightmares.

If you end up buying a fixer, you will want to remodel the house. Unfortunately, remodeling is an absolute nightmare, even if you have a great contractor because delays and surprise costs always come up.

See: To Make Money In Real Estate, Focus On Expansion

8) Nobody really cares how you live.

Unless you're constantly entertaining guests or run a blog about interior design, nobody will know or care how nice your house is. The only thing that matters is whether or not your home fits your lifestyle. We'd much rather use the $8,000 a month we save on ownership costs for travel and education than spend it on living in a much larger house and one more full bathroom.

9) Less of a target.

My friends who live in 6,000+ square foot houses are much more worried about stalkers and burglars than my friends who live in <2,000 square foot houses. After all, if you're going to steal, you might as well steal from the rich.

One such friend has a neighborhood security guard who the neighborhood association pays to sit in his car all evening. Another friend built a panic room with a 10 inch thick steel door. All of them have extremely expensive security systems.

Related: The Risks Of Upgrading Homes Nobody Talks About

10) Kids can go wild no problem.

When you buy a cheaper house, you aren't as stressed about kids scratching the floors. Drawing on the walls or spilling food is no big deal. My friend who just finished remodeling his 6,000 sqft house told me he had a lot of anxiety when another friend came over with their toddler and the kid started putting his hands all over his white walls! My friend even frowned at me when I sat on his new sofa after a game of tennis! You don't want to live in a museum. You want to live in a home.

11) Smaller environmental footprint.

It's always funny to hear extremely wealthy people talk about the importance of the environment while they live in mega-mansions and consume massive amounts of water and electricity. 

Related: The Ideal House Size And Layout To Raise A Family

12) Help alleviate a housing shortage.

If everybody drove a bus to and from work with nobody else inside, there would be a traffic crisis beyond imagination. By living in a home that is being fully utilized, we maximize existing inventory. We also make housing more affordable by reducing demand.

Instead of buying a house two sizes too big, buy a house that's just the right. When your ego clamors to come out, take solace in knowing you can afford to buy a much bigger house. Yet, you don't have to deal with any of the headaches that go along with living in a mansion.

Social Comparison Makes Wanting A Bigger House More Common

Now that my boy has been in school for several years, I've gotten to know more parents. And you know what? The desire to own a bigger house has come up again due to ego.

Before meeting so many parents, I was more settled with living way below my means. However, once I learned how other parents lived, I started thinking to myself, “why not me too?”

At the end of the day, if you buy responsibly, I don't think most homeowners will regret owning a bigger house. I think owning a house is one of the best ways to decumulate and enjoy one's wealth.

Invest In Real Estate More Surgically

If you're looking to buy property as an investment or reinvest your house sale proceeds, take a look at Fundrise. Fundrise is one of the largest real estate crowdfunding platforms today. They allow everyone to invest in mid-market commercial real estate deals across the country. These deals were once only available to institutions or super high net worth individuals.

They are the pioneers of eREIT funds and eFunds. Thanks to technology, it's now much easier to take advantage of lower valuation, higher net rental yield properties across America.

If you're an accredited investor, check out CrowdStreet. CrowdStreet focuses on individual opportunities in 18-hour cities, where valuations are cheaper and cap rates are higher. Due to the spreading out of America, the growth of second-tier cities is growing fast.

I've personally invested $954,000 in real estate crowdfunding to diversify my real estate and earn income 100% passively.

Fundrise Due Diligence Funnel
Less than 5% of the real estate deals shown gets through the Fundrise funnel

93 thoughts on “Don’t Let Ego Make You Buy A Bigger House Than You Need”

  1. Rabbi ahmed

    I do not know if I am going to get a reply to this. But I want to share my situation.

    I am Rabbi. 18 and a half years old, have just entered college. I live in a family of 5 in Bangladesh. My father, mother, grandma, me & younger sister.
    Till now, we have been living in a small apartment of 1100 sqr ft.(350$ monthly rent). Where my sister shared a room with my grand ma. But she is 16 now and needs her own room, personal space. Thus, we are thinking of moving to a new place.

    But if we look for a 4 bedroom apartment(1700-2200 sqr ft), the rent is too much. exceeding 500$. almost 550-600$. Maybe it seems like not much, but here it’s quite a lot. And my fathers earning is also not too high or something. We can manage if we take a bigger apartment.

    But if we are to pay 500-550$ month, and 6000$-7000$ a year. Should we buy an apartment, rather than renting one?? it will cost around 90000$. We have around 45000$-50000 cash excluding our other assets. If we then take a loan for the rest, we can pay the rent as monthly payment. But I am a little bit scared, because father’s health is not so great either. There are other costs as well, me & my sisters tuition fees, grandmas medical & stuff.

    My question is, Should we look for a bigger apartment with a bit more rent since we need it and live a bit more comfortably? Or Rent a smaller apartment, live compactly(my sister & grandma in one room), hoping to find an apartment to our level and take that risk??

    We also have an offer of buying 4 shops in a popular area of another state.(70000$). If we can renovate it & be patient with it, we might be able to sell it in a higher price or get the monthly rent from there. I really don’t know what to do.

    Another fact is, My father is 51, mother is 44. All their life, they struggled. Lived only to live, never prioritizing comfort. I really feel like, they have worked hard enough. they deserve a bigger home, better comfort, some mentally peaceful environment.

    I really don’t know what to do, Kindly Offer your suggestion.
    #financial_samurai

    1. Get rich slow

      Hi Rabbi,

      There is another option. You can do what we did. We bought a house 7 years ago that we could not afford. My wife and 3 children moved into the largest bedroom and we rented out the remaining bedrooms. After 2.5 years we were in a financial position to no longer need renters to help pay the mortgage (but we still rented anyway because we grew to enjoy the situation).

      We bought our house in Silicon Valley (near San Francisco) and paid $730k USD but put down 10%, or $73k, and borrowed the rest from a bank, as is typical in the USA. Our house is now worth $1.6 million. We are currently planning on buying a 2nd house in Mountain View, CA (headquarters of Google and Facebook). Old houses in poor condition is less than $2 million. This time we would live in the living room and garage (for 2 years only), and hope to make another $1 million in less than 10 years. We plan to keep the first house as a rental since 7 years have now passed and rent payments in today’s market would just barely cover the mortgage.

  2. Sharon Strein

    Hello, my house is 1900 sq ft and nicer inside than many of my friends super large homes. If my kids scratched the floor there would be trouble. Your view that larger is a different lifestyle is false. People are people and the way one keeps a home depends on the person not the size if the house.

  3. I totally agree with your post. I loved having a small home. It forced us together as a family & we are super close as a result. We ate meals together, had tv time together etc. Now that my children are adults & on their own, I am so thankful for that together time. They still come over & we all hang out in the living room like old times.

  4. Skylar Williams

    I like that you said one of the reasons it’s a good idea to buy a smaller house is that there are fewer maintenance headaches, such as wiring and leaks. My daughter and her wife want to move out of their apartment and into a house. I’ll recommend that they look into single-family home listings.

  5. erica galusha

    Would you ever consider a property with a small guest house? Ideally, that’s what I’d like- we can live in the main house (our current one is 2300) and then guests can stay in the small house and we could Airbnb the space when we don’t have guests. I love all of our parents, but I can’t take their messes in the kitchen!

  6. No regrets on large homes. We’ve had my father and our business at home, both paying rent. Got into much nicer homes and much nicer neighborhoods as a result plus one is fully owned now and rented out, covering the mortgage on our country estate.

    But I agree on the cozy comment and our living area in both homes is cozy and we spend daytime hours in the cozy common space. The extra square feet is in bedrooms (5) and mother in law quarters. Our first home functions like a high end duplex that looks like a house.

  7. I enjoy your posts and am a huge admirer of your discipline. I realize after reading your post and the comments that I’m going to sound ridiculous, but my husband and I live in a 6000-sq. ft. house on a 0.7-acre lot in the suburbs of Chicago, and we do not have kids (and don’t plan to have any in the near future). I moved to Chicago 6 years ago from the east coast and was blown away by how much cheaper homes are in the midwest compared to NY/DC. When my husband and I got married, we decided that we may never get another chance to have such low housing costs in a large metropolitan area if our careers take us back to the coastal cities and decided to buy a huge house and really enjoy living a (relatively) lavish life for as long as it can last. For what it’s worth as a counter point of view, I would say we do not regret this decision because we have spent the past 3 years that we’ve owned the property enjoying furnishing each room, taking walks in our large front and back yards, hosting parties, hosting family, gardening, and hopping through bedrooms every week. We could have purchased a much smaller townhouse or apartment for just the two of us and have more cash for investing, but we did not believe that any additional savings would give us more happiness or more financial freedom than we already have. Do you believe there is any merit to YOLO once you reach a certain threshold? I think taking YOLO too far can lead to irresponsibility, but when a certain level of financial comfort has been achieved, is it still ego to indulge in a few luxuries during the short life we have on this earth?

    1. Thanks for sharing your perspective! At the end of the day, what matters most is what you enjoy. The value you can get in the Midwest is truly extraordinary compared to the coastal cities. And I can see why he would want to go big once you got there.

      I have friends from Singapore to have to pay a 100% car sales tax. As a result, they come to the United States and by Porsches and other fancy cars because they are “so cheap“ compared to back home.

      Please let me know if you still feel the same way about your house in five years. Just curious to know. You can always take turns sleeping in each bedroom to :-) I think having a lot of land is really nice.

      1. ADRIANA GAMONAL

        Hello, thank you both for your perspectives. I know you are talking big numbers ( for me ) when referring to houses, for me, I play with lower numbers given my financial situation. My perspective is different since I can only afford a 500K house. I am a 29 yo, also a mother and immigrant who is trying to learn about this country, the language, the culture and I am starting engineering school.

        What I like about your comments is the importance of happiness in a house. Each person has a different meaning for happiness and joyfulness, here the main point is how do we feel given the amount of money we have or the belongings we possess. I remember one day when I bought my first car in this country (an old Honda Civic 1994 in 2014) I was super happy. Compare the situation where you had to take the bus to go to your community college every day, take your baby (no husband, he was in Peru) to the doctor’s appointment, by that time, having a car was the most exciting thing ever. Until the car started giving me problems, I made some efforts and bought the brand new and expensive Civic 2015. Extreme joy!

        Years passed and I realized it was not the car, it was the quality of life that I got that made me happy. Of course I would be happy in a $2M home, but I don’t need it. Maybe my $250K home is what I need now even when I can afford a $500K home. Maybe I would be happy in both, but right now, I believe is better to focus on my personal goals and my family (you are right, kids don’t matter the size of the house, the just want to play) who give me a more fulfilling life than a bigger space.

  8. TheGreatOutdoors

    Realize I’m late to this thread! Another factor in the expensive coastal metros will always be additional taxes. The left leaning econobloggers I read from San Francisco and NYC are completely obsessed with either a Land Value Tax, the yimby density additions (failed for now), or imputed rent. What if imputed rent passes in the near future in San Francisco and surrounding counties?

  9. I’m curious, why do you think your parents would want to live with you? I love my kids but we have way more money than them and would never want to live with them unless we couldn’t care for ourselves. Even then we would pay for in home care and not burden them. Sure we want to see our grandchildren but we most definitely do not want to raise them or act as unpaid babysitters except occasionally when we choose to offer. Been there, done that for our own three kids. And also wouldn’t you have to make the same offer to your wife’s parents? Ignore my nosey questions if they are inappropriate because they look that way now that I read them but I don’t think many parents really want to live in the same house as their kids or even in the same neighborhood.

  10. I was starting to lose a little respect for you as I read this! And then got to the ending and realized all is still good.

    But I’ve got to wonder…..what if the owner came back to you tomorrow and agreed to take your original offer? Would you still buy the house?

    For what it’s worth, I’ve seen a few marriages fall apart over massive home restoration/renovation projects.

      1. :)

        But in all seriousness, what would you do if the home seller came back and agreed to accept your offer?

        1. I would turn the screws even more with an inspection contingency That asks for more credit.

          But at $1.95 million, I do think it is good value and worth an investment. Therefore, I would buy it.

          1. Well, if it works out, then it may give you more incentive to have more children. Junior could use some playmates in that big house!

            1. I think our plan would be to invest about $350,000 to remodel, and then list a year later or maybe two years later to try and earn at least $250,000 after fees and taxes. If we can’t get the price we want, then we would move into the house and enjoy bigger house. Weed then rent out our existing house or keep it as a Financial Samurai office given it has a hot tub as well!

              This is seriously the case of no risk, no reward. But it’s stressful to think about how much time and money needs to go into the investment to make money. No wonder why so many people don’t bother investing. It can be very scary!

  11. Damn it Sam. I am thinking of buying an old Lexus to replace my old Corolla then I read that you get a Honda Fit!

  12. Bigger is better! At least, that’s what could surmise from my recent behavior. I’m about to close on a 3250 SF house in Seattle and rent the 900 SF house we’re in now. We moved to the small place from a 1900 SF house 5 years ago when the youngest of two went off to college. We thought less than 1000SF would be cool, but learned we aren’t that cool. I still feel a bit silly for buying in this market, but here’s how i make myself feel better about it: 1-the wife is happy. 2- got lucky with rushed downsizing/retiring seller who shocked us and our agent by accepting 100k under asking price, including inspection contingency. 3-selling one of our rentals that’s worth more than double what I paid for it 5 yrs ago 4- HOA-protected west facing ocean and mountain views. 5- can airbnb lower of 2 levels. 6-the wife is happy..and promised to manage the airbnb. :-)

  13. SF Bay Person

    We bought a 5 bed, 3 bath, 3500 sq-ft house in the Oakland, CA. My wife and 3 children lived in the master bedroom for the first two years and rented out the remaining 4 rooms. It’s been a few years and now we have international students living in two of the rooms, our 3 kids are in 2 rooms, and my wife and myself have the master bedroom. Overall we’re glad we bought a huge house that we could not afford (without renting rooms). Also I am extremely introverted (typical high-tech personality type) but I have to admit that I really enjoy sharing our house with international students and being a surrogate parent to them.

  14. Excellent article. You’re absolutely right the ego just makes us desire more than we already have. We currently live in a townhome which is a pretty spacious 2,100 square feet. But coming from our 700 sq ft apartment, it seemed like a mansion. Now since we’ve been in the townhome for 5 years, it’s starting to feel cramped and homes in the 3,000-4,000 sq ft range seem desirable.

    This ego is what keeps the real estate industry humming along. If you can recognize its influence, which it seems you certainly have, it will save you a lot of money and let you enjoy life more.

  15. Todd Cramer

    Sold our 1400 sq foot house in Boulder to move to small mountain town of Carbondale CO. At 48 needed to get away from the rat race and settle in to have two twin girls now 4. Took $350K profit from Boulder sale to buy 2.5 acre property on roaring fork river with big views for only $130k. Lots are selling for $550k today. Stretched to build 4800 house for the four of us and 3800 is our space and rest was built as “mother in law wing” for live in nanny that does trade on caretaking for big rent discount. I highly leveraged to build at $1M but feel like comparables would sell for $1.7 three years in. Points- I feel like if you get out of the city bigger lots and homes are more the norm in vacation towns. 3800 gives us guest room and room for four of us-this part feels just right. Extra wing gives me insurance for potential $2400 a month rent if we need it. I work my butt off in the yard constantly improving things & keeping up house but I its my therapy away from kids and I like it. So if I was in city things might be viewed in your light but in smaller communities you get way more for your money. I luck out in that I have worked for 10 years as remote IoT Security expert for large tech company so our income & benefits are $340K. Always risk losing job then turmoil could set in but feel I could get another remote job or if push comes to shove downsize to support different income profile. Just offering another perspective. Love your site- always eager to get educated on next article. Could you do an article that breaks down selling an LLC vaca rental property with 4 partners as one needs to liquidate but how can partners could do 1031 exchange to avoid capital gains tax. Sites outline 4 methods but they are hard to comprehend and seem borderline with IRS. Need your help to simplify so I can figure out. THanks

  16. Mr. Rational Buck

    I grew up in a three-bedroom, two-bathroom 1,700 sqft residence. For a few years as a kid, there were five additional family members in the house. I’ll be honest, it never felt small or crowded to me as a kid – it felt lively and fun. It was home.

    I think you’re right. Your child doesn’t mind the size. He will probably love the fact that it isn’t a “museum,” as you put it, because he will be able to be a kid inside of it. Regardless of the sqft of your home, he will be grateful for your love and the fact that you and your wife are able and willing to stay at home with him. You may want to work again when he is older, and that’s okay. Y’all seem like great parents, and your love for him will be recognized.

    Keep up the great work Sam :)

  17. Dr. Remoulak

    Good article Sam. Glad to hear you’ve resisted the temptation (for now). You mentioned doing it in part for the sake of your son, but in my experience, it’s far more important for a child to have loving, devoted parents instead of a bigger/fancier house, and your son certainly seems to have that (and from the pics you previously shared on the work you’ve done on your current home, you guys are hardly slumming :)

    Financial question – you mentioned buying the house for cash. Assuming you’d have to sell stock holdings to do that? If so, were taxes on the gains included in your analysis? Just curious more than anything.

    1. Yeah, we’re aren’t slumming it too bad. Just a simple, cozy life at home.

      I would look to sell my underperformers, then my stocks will little to no gains, and then positions I wanted to underweight.

      But I do have a lot of cash, as raising cash has been one of my main financial priorities this year.

  18. Small homes are for small people.
    You want Respect you go Big!
    Small crushes you and people look Down on you.
    Power and prestige go hand in hand and it’s the only way to get ahead. You want to be admired and looked up to you have to buy the biggest you can. Everything else will flow from that including the right woman for you, neighborhood honors, and entitlement.
    I once lived by a tiny old man in a tiny shack and he was crapped upon and treated like doggie doo. When he croaked we all celebrated and it was party time and the dawn of a new era for the town. Nobody likes small and small people in small houses. They’re so yesterday, you gotta get with the changing times if you’re to earn Respect. Little guys in little houses live little jobs with little pay and get little Ugly women, if that.
    Keep up with the changing times, my man, or be left behind.

  19. Don’t buy more than you can afford. If you need 2000 sf but but 5000 sf with cash so be it.

    If you have a mortgage you are not an owner. You are just in debt and the bank owns you.

    If you own cash or have the liquidity to pay cash (that means you have 24hr access to cash for the value of your house) then you truly can afford it.

    If not, welcome to the Jone’s.

  20. We bought our second house 10 years ago. It’s 5 bedrooms and 5000 sq. feet. I was looking for 4 bedrooms and around 3000 sq. feet. 2 adults and 2 big dogs at the time. But it was the right curb appeal on the right size lot in the right neighborhood. So we did it. And I wondered for years if it was a mistake, even though we love our home. We were able to host large family gatherings, parties and some charitable functions as well. Then 4 years ago a family member had a health crisis. We were able to move her and her son and husband in with no problem. Then my mother moved in to help and friends came to visit. We had plenty of room for everyone. It made an awful situation less stressful. Ever since then, I have been nothing but grateful that we made this purchase and can easily afford to live here.

  21. It’s not about maximizing utility for me; houses that are too large just feel lonely. We like our 2300 sqft 4 story townhouse… visitors can have their own floor when needed, but everybody still comes together to hang out.

    It’s OK to get a bigger house when you have the people to support it… which means waiting until your parents are actually thinking of moving in.

  22. In 2009 we bought a 1500 sq ft town home for $800K in one of the most expensive neighborhoods in bay area, at that time we could’ve sold our pretax ~$2M stocks and bought a much nicer home, but we decided to keep most of the stocks and paid for the modest home instead.

    Now in 2018, our stocks+other investments has grown to ~$7M, and our home has appreciated to only $2M (had we bought a $2M home in 2009, it’d be $4M now). Even though we’d like to get a bigger home, our kid is leaving in 4 years to college and we’d rather wait till our stocks appreciate to $8M in 4 years so we can comfortably retire and travel, instead of living in a $4M home, <$1M stocks/401K and having to work forever because of the property tax (which was exactly what some of our friends did, e.g. one sold ALL his stocks to buy a $3M home PRE-2008 financial crisis, now he's living in a $5M home but no stocks other than 401K and still working because his property tax is $60K/yr.)

    S&P will 2x every 7-10 years, but even if our home does the same, you can't live off it. We'd rather be like the 90 yr old secretary who lived in modest apartment and left $10M to charity, then most corporate slaves who live in expensive homes and drive tesla but living from paycheck to paycheck.

    1. I think Sam just had a recent article as to what defines a normal house price.
      Per your post you seem to imply that a $2M house does compare as a modest Appartment from 96 year old Silvia Bloom from NY. She gave away $9M
      I guess it’s all relative.

  23. Great article FS. I personally get tempted myself but always remind myself that I paid everything off for a reason – to get out of debt and increase my net worth. After all, my kids are moving their way out leaving the nest almost empty so downsizing even more makes sense.

    I’m in the mindset that there is no need to show off. It’s best to be content and happy with what you have.

  24. I think the older you get, your ego will deflate a bit especially if you have a family and just need enough space to house them. Having too much space in your home will make you feel empty figuratively and literally. Can’t make sense for a family of 3 to have a 5-6 bedroom, 3 bath home if your going to use 2 of the bedrooms and 2 baths unless you plan to visitors stay over constantly or plan to use it for extracurricular activities(home gym, entertainment room, etc..). I think the perception of wanting a bigger home comes from watching TV and see millionaires owning homes where they may only use half the space. And thus it effects others that sees that as something they ‘need’ to have when in reality it’s a ‘want’

  25. I think I know what house you bid on as I have walked by it many times. What do you think the value of the house is (as is)? and what do you think the house will ultimately sell for? Seems like the seller has backed themselves into a corner where they started at the lowest possible price (& unable to cut to draw interest). What do you think of the realtor?

    Your post omits 2 important facts as to why it hasn’t sold: 1) the house next to it is a dilapidated eye-sore (easily the worst-looking house within a 1-mile radius) and 2) it doesn’t have a backyard or a usable front-yard (a feature that a family with kids is probably looking for especially if you’re going to pay that much for a house)

  26. When it was just me and my wife, we rented a 600 sq ft 1 bedroom apartment. Now we’re in an 800 square foot converted 2bd co-op with 2 little kids. I feel like we’ll need more room at some point but I don’t worry about my ego making me buy a bigger house than I need cuz I just couldn’t afford it. Shoot, a short sale in my neighborhood starter house that needed work was close to $700,000 and I don’t even live in Manhattan or a hip part of BK. And I’d like to think I got my ego under control…I mean I drive a minivan! LOL

    1. I guess that’s the upside of not being able to afford something!

      Is it discipline if you don’t eat when there’s only water in your fridge and nothing else? Or is it discipline if you don’t eat when your fridge is full of yummy food and there’s a freshly baked batch of cookies on the counter? Hmmm.

      I commend you guys for living in a 2bedroom with 2 kids! That’s max utility right there, and savings too.

  27. It took me a minute to realize what you were saying – they countered with an offer that was higher than ask? Is that because the SF mentality for real estate is that everything should go over ask? I think you probably dodged a bullet here.

    1. Correct! They interviewed multiple real estate agents who indicated to the sellers that they could probably get $2.5 million for the home. So they’re stuck on a number higher than their asking price, because that’s the way the game is played here in San Francisco.

      But what they don’t realize is that the summertime is slow, the absolute price point is high for the neighborhood, and people are starting to take their time as inventory creeps up.

      For me, it’s always worth a shot to put out a lowball offers because sometimes they go through. With docusign everything is electronic and takes less than five minutes to submit an offer.

      See: https://www.financialsamurai.com/spray-and-pray-the-cheapest-way-to-invest-in-real-estate/

  28. Hi FS,
    I’m a big fan and long time reader. This is my first post. I’m in my early 30s and have done reasonable well in R/E. I still work but I am financially independent as it stands. I am in Vancouver, Canada so not unlike San Fran, the prices are sky high. Through leverage and hard work, I’ve picked up a handful of houses over the last several years. Everything cashflows. When my friends ask me, I would highly recommend buying the biggest house (for utility) as you can as $/sqft is much lower than a typical condo/townhouse. These are in good parts of the city close to malls/transit/amenities but not the high end neighbourhoods. Whether through renting rooms, suites, and Airbnb, one can live in the first property, rent out the basement and begin saving for the next. A team to assistance with financing, purchasing, managing would definitely help. I find it interesting our views are quite different regarding R/E size. Perhaps its due to the hassle or limitations of renting in San Fran? If we were to put aside Vancouver/San Fran it still makes sense to me to buy the biggest and cheapest $/sqft (in good neighbourhoods) and rent out the area you don’t need to build equity faster(assuming you don’t mind managing a few tenants). SF – Would be really interested in your take.

    1. In a bull market, you want to buy the biggest, best property you can find with as much leverage as possible.

      During the latter stages of the economic cycle, do you want to de-risk, or use much less leverage.

      If you are in your early 30s, then you have never had a significant amount of capital get exposed to a downturn. But the reality is, you will never know your true risk tolerance until you start losing money.

      So only you can decide what’s best for you.

      1. Thanks for your insight FS! Since you are looking to buy, would you say the bulls are still alive and well? I’ve read your posts about redirecting your investments in the heartland of USA. I’m hands on so I rather manage my own properties for the time being. (I have a daughter almost 2 so it will take a toll as my properties age). Given the geographic restricts of Vancouver (& San Fran) I am for long term hold on prime locations as oppose to cheaper R/E in a land abundant cities ie. Calgary.

        Given my age, I reason I can out live any market correction. The Vancouver vacancy rate has been low for decades and currently less than 1%. Since I’m not flipping the properties so I don’t see much risk with changing market conditions. I’ve been managing rentals awhile now (nearly 10yrs) and never had major issues with tenants. I can systematically bring in quality tenants that are low maintenance. I would consider interest rate risk to be low and pose a nominal risk. I’m lucky to have a solid team and got into the market at the time I did. I do want to de-risk/leverage in 8-10yrs and do what you have done with your investment portfolio.

  29. There are some reasons other than ego to favor of living in a large house while you are raising a family:

    (1) Home gym. You can continue to workout even when you’re home bound with young children, and it’s awesome. You can take a Peloton class or a Pilates class without losing any travel time or paying for a babysitter.

    (2) Home office. When necessary, you can shut the door and work even when the kids are being noisy and challenging.

    (3) Hosting extended family is easier.

    (4) Toy storage. We live to play, and we have a collection of various sports and outdoor equipment to store.

    (5) Room for an au pair. We’ve never had one because we like our privacy and get by fine, but we have friends who are part of 2-income households that have au pairs, and they often refer to their au pair as a life saver. Plus, au pairs are significantly cheaper than a live in or live out nanny.

    (6) Having space is just nice. Nothing ever feels cluttered and cramped.

    There are downsides, as you noted, but as long as you can comfortably afford to outsource some of the maintenance and cleaning costs, it all works out. We’re lucky that a 5000 SF house in our town cost less than most 2000 SF houses in SF and the property taxes are significantly lower as well. And the lifestyle is nice and outdoorsy, hence the exodus of people from CA. When the kids leave the nest, one call always downsize and simplify, but some people like to hold on to their large homes in order to host grandchildren.

    1. Those are good points that we have considered for sure.

      It’s best to compare the 2000 square-foot home in your area and the cost differential versus a 2000 square-foot in San Francisco Since your area is where you want to live.

  30. “You don’t want to live in a museum. You want to live in a home.”

    I’m so on board with this. I’ve never understood the value of having such nice things that you can’t enjoy them. When you cover your couch in plastic, it’s no longer comfortable! If you fear your car getting a scratch, is it really bringing you joy or just more stress?

    I’ve bought two homes in my life. Both were purchased assuming our income would be cut in half. It’s possible that I bought too little house both times as a little more space would have been nice. But, those purchases have set me up for financial freedom at a young age. I would not trade that for all the space in the world.

    1. Totally agree. It doesn’t mean one can’t have nice things. It simply means if you are that worried about what happens to it, then no you can’t afford it.

      No Porsches for me until such a time when they become so cheap (relatively) I don’t care what happens to it.

  31. I’d challenge the “big house” stigma even further: what’s wrong with a condo/townhome? Americans have this fixation with single-family houses that I still don’t get, even after 14 years of living here. Perhaps deep down, the rationale is hoarding: grabbing a piece of land to prevent others from having access to it – it’s a zero sum game – making me feel exclusive about myself. Isn’t that so?

  32. Hi Sam, nice find! At $560/sq ft, that home looks like a bargain even at full list! Wonder why it’s sat on the market for so long… Houses in my South Bay neighborhood are selling 20% above already inflated list prices right now. I’d put in an offer on that fixer-upper if you shared your contractor contact list. :-D

  33. Bravo on the list of those reasons! I agree wholeheartedly with every single one. I’m glad your bid got rejected. Sam I’ve said this before, you are very smart and a great writer and blogger, but you are addicted to real estate as an asset class, and your luck in timing SF real estate has contributed to that addiction. There is only so much stuff we can want/need/handle in our lives, it’s important to find a balance, and you surely have, so don’t go ruining it. Your reflection on family upon your rejection is also understandable, you have a drive to provide for your family and extended family, I share those values with you. But just like your little child does not care about how big or nice the house, your real family and friends don’t either, and you can still have good times with them in your ‘small’ house. 2000 square feet with outdoor space and ocean views in a world class city for a small family with one baby sounds great!

  34. Lol. This is your first in awhile that doesn’t make you sound like a west-coast rich snob! Good post about not letting ego get in the way of making sound decisions.

    My wife and I bought newly built 900 sq-ft town-home in a great neighborhood only 1 mile from TX downtown for 450K. It’s small and we could definitely have afforded more but we ascribed to the “Buy the house that fits your current life, not the house for your future life” rule. We love it. Sure they are major compromises in space but we’re definitely using every room and using the city living spaces more than others. Every time I dream of a bigger house for future kid I remind myself the kids in NYC make out fine with even less space!

    1. Thanks for your kind words. But in the future, I only accept comments from people who live in homes larger than 1,000 sqft or who don’t hail from Texas. Will let it slide this time!

  35. Sounds like you dodged a bullet! I can relate to all the feelings you cited for wanting to buy that house. Even though it might be profitable in the future to own that house it sure sounds like it would be one giant headache, or maybe multiple headaches, to go through remodeling it from top to bottom. It’s true that you just don’t know what problems could be lurking in an older house and that can be so stressful when they finally surface.

  36. Great article, and if you have one child your logic is perfectly sound. When I remarried my wife and I had a combined 4 children with 3 living full time with us with over 12 years difference between the youngest and the oldest child. A small house was out of the question for us. The other factor is as your children get older you and they will want there own space. I would recommend if you want that must space come to the south. I paid less than $100 per square foot for my house, and property taxes are 1/5 of what you are paying in San Francisco, and I have around 5,000 feet of space.

      1. I live in Little Rock AR. I understand your love of the ocean, but the cost of living is outrageous, and the extra income doesn’t make up the difference. Your middle of the country investment strategy makes a ton of sense property taxes are low, and cost of purchasing houses are really low per Sq ft, but the base rents are really high for what you are getting. Renting property in the south makes zero sense unless you have a very short time frame living here. Wife and I looking at several properties to downsize once our family has shrunk (6 total). Buy now rent for 7 to 10 years, and then move in. We currently live near a medical school, so good low risk renters who can pay above average rent, and don’t want to make a long term commitment.
        PS. Your article about renting and then moving in and the tax implications was great, and very timely!

  37. Our first house was 2,000 sq ft for just the two of us. I got a bigger house because my parents might move in. They stayed with us for 6 months then move to Thailand. It’s pointless to buy a bigger house for your parents/in law.
    Do they really want to live with you? They probably prefer to stay in their own place.
    Your kid don’t care that much.
    Anyway, good luck in your real estate adventures. Maybe you can find a house that’s just a little bigger. 4,000 sq ft is way too big for a small family.

    1. They don’t. But I’m planning for the future, and I foresee them needing their son close by to help them live as comfortable a lifestyle as possible. Being at least in the same house/compound/city provides for lots of synergies e.g. I can bring back food for them, I can give them a ride to the hospital, etc.

      1. Sam, I currently live in that larger idealized house that has room for the parents and in-laws, and I can tell you we’d have been far better off with a smaller home. Rent them a separate place nearby when they visit; find a place with an in law quarters where they have their own space to do with as they please; or get a duplex and Airbnb one unit so you can reserve it for their use when they come to town. It depends on the parents to some degree, but the boundaries you set can be challenging even with beloved parents you get along with once they enter your home, disrupt your parenting, or disregard your rules. Better to spare you and them that stress.

        Fondly,

        CD

        1. CD- I totally agree. My mom used to live with us (my husband, myself and my infant son then). She simply took over my son and did not let me or my husband even hold him. She chose what to feed him, how to bathe him, and ignored what I or my husband wanted for our own son. I felt like stranger in my own house, not to mention my husband was pretty upset with the whole thing creating tension to our marriage. It got to the point that I just couldn’t take it anymore because I felt it becoming unhealthy in all directions, and I had to ask her to move out. So we rented an apartment for her to live so we can have our own lives back. I felt so bad and guilty for doing that but in order to keep my marriage and get my son back, I had to do it.

          1. Self-preservation is key. I have a great relationship with my parents and in-laws, but it takes regular reinforcement of boundaries to preserve sanity.

            My father adopts the (unfortunate) philosophy, “I’d rather ask forgiveness than permission.” That’s great if you’re a startup, less helpful if you’re a grandfather.

  38. Simple Money Man

    Generally speaking, the ego becomes less of a concern the older you get. You just want to be comfortable and spend more time socializing with people you care about. I used to like name brand clothing a lot and had some nice cars in the past. Now as long as I stay fit, clothing will look good (I think) no matter what brand it is. And traffic will still suck no matter what car I drive.

    One thing I will say is when your kids grow up sometimes you do end up buying them things because their friends have the same or similar items/gadgets. For kids, it’s not so much ego, but instead hey he or she has that and is having fun so I wanna have the same fun too! But this should be incorporated into some type of a reward system.

  39. Tuckerman Jones

    So I was going to post that a residence ties up capital that could be put to better use, but when I looked at the numbers over the last 17 years that doesn’t seem to hold much truth. The Case Shiller index in 2000 stood at 108.79, and in 2017 had increased to 196.23 – which results in a compound annual return of 3.53%, which doesn’t account for taxes, insurance, improvements, and maintenance costs. In contrast, the S&P500 stood at 1,425.59 in 2000 and in 2017 at 2275.12, which results in a compound annual return of 2.79%, not including dividends. When adjusting for home expenses and dividends (average about 1-2% per year), it has probably been little better to hold US Stocks recently, but not much. 17 years is a bit arbitrary, I admit, and over the longer run the numbers may be different and more favorable to stocks – but the “recent history” is interesting to me. Thanks for the thought provoking post, Sam.

      1. Tuckerman Jones

        Maybe that’s why “old money” ascribes to 1/3 in real estate, 1/3 in bonds and 1/3 in stocks. Personally, I don’t really like it when the stock portfolio becomes oversized in comparison to other investments. Its a game that I can’t control and intelligence doesn’t always prevail. And with real estate I try to minimize if not eliminate debt, as then I don’t need to worry about the price fluctuations. I know that I have missed out on leveraged returns over the years, but I also know that leverage risk has brought down many an investor.

    1. Real estate might have won out during this period, because most people use leverage on real estate.

  40. After living in a 3,200 sqft McMansion for a decade we just put it on the market. When we bought it we thought maybe we’ll have a couple of kids and “grow into it”. We have one kid and it feels ridiculous to live in such a huge place.

    We bought a triplex at the beach in NC for half of what our McMansion costs and will be moving there in June! We’ll have 1,500 sqft of space for ourselves – 3 bedrooms and an office. Every single sqft will finally serve a purpose. The two apartments downstairs are currently rented out on a month-to-month lease and we may turn those into Airbnb’s at some point. I’m so looking forward to this downsizing!

    1. Sounds like a plan! It will feel good to maximize the usage of the home.

      How long did you feel ridiculous for living in your 3,200 home for 10 years? And how old is your kid now? What were some of the positives of living in such a large home?

      Beach living is great.

      1. Our son is 5 now. When we looked at it 10 years ago we were ready to buy it after walking just the first floor, which incidentally is about 1,500 sqft. It was open, bright on a nice street with an amazing private backyard. We were sold before even seeing the second and the third floors. The house started feeling big to us after we knew that we’ll only have one kid, which was last year. But honestly, it’s too big even if we had 2 kids. Cleaning and maintaining it was a nightmare.

        The positives have nothing to do with the size – location, privacy, schools, great yard and access to a pool… If we could have the same exact house but without the 2nd and the 3rd floor it would be perfect! But they only have huge McMansions that have all the positives I described in this area so if you downsize you’ll definitely sacrifice one or more of those.

        The beach house is a total fixer upper but we’ll make it just as nice as our big house but without all the wasted space, that I can’t stand. Like you said – it feels good to maximize the usage of the home. Our yearly taxes will be under $2,000 and all other bills should go down as well… Our tenants will cover it all and then some so zero housing expense since there is no mortgage. No pool but the beach is a quick bike ride away!

  41. Age has a lot to do with the desire to own a large home. When we were buying our first (and only home) my husband was just finishing his medical residency. We had been married 8 years, had 1 child, and I was desperate to own a house with a backyard, etc. We did not have much saved, and “settled” for a 2,800 sq. foot house on a third of an acre.

    Then 2 more children arrived, and suddenly the house did not feel that large. We also had savings at that point, and I begged my husband to look at larger more high end homes. All of my friends were ‘trading up” to 4,000-5,000 sq. ft places.

    He refused. So 30 years later we are still in our “starter” home. Three empty bedrooms, lots of memorabilia that my kids refuse to take (as they have apartments), and high property taxes with no one in school. But living below our means has allowed us to save in all the areas you mentioned. And we have spent probably $700,000 on private college for 3 children, and have another possible $300,000 coming down the pike for medical school for the youngest. So in retrospect I am glad we did not trade up.

    Age will also change your perspective, just wait. You begin to feel that the house is a ball and chain, and all the stuff is emotionally dragging you down. Just wait. In our real estate neck of the woods (Buffalo area), wiser to keep money invested over the past 30 years.

    1. Ooph… $700,000 on private college sounds painful to me, but I’m sure there’s a lot of satisfaction knowing you guys provided the best education possible for your kids.

      Curious to know how your kids feel about having their tuition paid for? Is there some type of agreement they’d pay you back?

      I agree that a big house eventually will feel like a big ball and chain. It’s how my mom feels now with their house in Honolulu. She just wants to live in a 1 bedroom condo instead.

      1. We always knew we would pay for their college years. High end private colleges costs about $60,000 a year with tuition, room and board . Thats about $240,000 per child. Oldest was a bit less because it was 2002 when he began. But you can do the math . Anyway we give a lot to our kids without blinking an eye. I always say their education was my larger house or vacation home. We may have the youngest take a loan out for last year of medical school which is $55000 plus living expenses each year. Let him have some skin in the game. Our folks paid for all of our college and graduate degrees so we modeled them I guess .

        1. I wonder how much character it builds to have kids pay for at least part of their college tuition. What is the right ratio or balance… hmmm.

          What do your kids do now?

          My fear is that I pay for my kid’s college education and he decides to slack off or take Art History and live at home until 30. It’s hard for me to appreciate something or get motivated if I get something for free.

          1. #1- Hedge fund- trades natural gas (very successful at 33)

            #2- Works for major record label- doing well, and would work for free so happy

            #3- worked in commercial bank as analyst for 2 years, hated it. Going to medical school in August (a highly ranked one).

          2. I can highly recommend a 50/50 split with any scholarships going towards the kid’s half. My parents did this and I plan to do it with my kids.

            Like you say, some skin in the game while encouraging performance and not letting the absolute dollar amount get too high.

          3. My college was half and half as well – my parents paid half, I paid for a quarter of it via summer jobs that started back when I was in junior high school, and the remaining quarter was good ‘ole student loans – took me about 8 years to pay back that Stafford loan with 9% interest… crazy…. but it sure taught me responsibility and the value of a buck….

          4. My plan for my newborn (knowing reality sometimes interferes with plans) is to tell him college is 100% on him. He can choose what he wants to do. If he feels it is worth it to him, he will earn scholarships, work extra, or take loans. By doing these things I will know that college means something to him. Once he graduates, I am still free to pick up the balance :)

  42. Having two young kids and living with my in-laws, my 4 bedrooms house is comfortable enough for us. If we have guests coming over, there are lots of space in the basement to house them. I prefer to live in a house where the people living in it can spend more time together. If your house is too big people will be scattered around the house, which would defeat the purpose of living together.

    1. That’s true about having TOO BIG of a house.

      But I like a house big enough to have separate independent living spaces, but small enough where you can just pop down, pop up, or take a short walk to say hello and hang out. I like hanging out with my parents and then retreating to do my own thing.

  43. Brian McMan

    I respect your work, but this article is confusing. Did you really lie to your wife about never buying a fixer, then just a few short years later try to buy a fixer, got rejected, and come up with a list of reasons to justify not getting the house? And…none of those reasons had anything to do with some promise your made never to buy a fixer again?

    While I may not understand all the house stuff, its nice to see that people are still human, even the celebrity blog writers. Best wishes.

    1. You are correct. I am a liar.

      But at least I am honest enough to admit it in this post and to you and discuss putting in an offer with my wife before putting in an offer.

      That has to count for something right?

      1. Brian McMan

        Not gonna judge someone way out in front of me, just giving honest feedback. I figure the person who invited us to read financial blogs to get educated, then spent however many dozens of hours making these posts, then left that gem in his post at least deserves honest feedback. Thank you for that. Personally as someone without a wife who is scared of things like not being able to provide, not able to be honest with what I think to her, not being able to trust her…well its refreshing to see people way out in front of me have problems too unlike I see on Facebook, instagram, or twitter. Best wishes.

      2. No more fixers…for now!
        No more rentals…for now!
        No more weekend/vacation houses…for now!

        Not as dramatic and kind of politician-meets-standup-comedian, but problem solved nonetheless. : )

        I’m a liar too, Sam and Brian, over and over again. After a real estate transaction (even the smooth ones), or during a serious maintenance issue, or maybe a late-paying tenant situation, I imagine there isn’t a person on earth who has not uttered a “No more ____ !”

        I can’t wait to see the look on my husband’s face the next time I offer an unrealistic statement of conviction followed by a “um, for now!”

        Priceless!

  44. Kids and ego can make you do some strange things, I struggle with this quite often. Very well presented and awesome reasons to fight that ego. We are also looking at the house thing for similar immediate and extended family reasons. Will see how this pans out.

  45. Agreed with Accidental FIRE above on the list of reasons to fight your ego.

    For me, #3 is one of the most practical and objective reasons. Why have extra rooms if they’re almost never utilized? Or at least in terms of space, why invest in the least utilized and/or less-return-for-your-investment rooms?

    We’re still renters, but I have had some of the same battles with the areas you’ve highlighted around ego.

  46. I think physicians are a class of individuals that fall into this very trap time and time again.

    There is an expected doctor mcmansion that every physician is expected to buy or build because friends and family expect since you are a doctor you need to have a lavish house.

    That coupled with the fact that there are so many doctor loans available to make it easy for a physician to over extend his or herself and get a far bigger home than they should be able to get sets them up for financial downfall.

    I was able to buy not one but two homes as a resident (making 35-45k yr with over 250k of debt to my name already), that was how easy it was to get mortgages as banks were banking on your future income rather than look at income to debt ratio

    I lucked out because I used geoarbitrage to my advantage and bought an amazing property for less than most people pay for an average home.

  47. When we were looking at houses we looked at all smaller houses and condos at a lower price point. We saw a ton of houses and we saw nothing that we liked. I don’t know, maybe the inventory wasn’t good at that time. We then looked at one larger house at 2300 square feet and that’s the house we ended up buying. We bought it for the same price the owners paid 10 years earlier. Yes, the house is larger than we initially intended but I think it had little to do with ego. At the end of the day, a good deal is a good deal. Minus property taxes, we are paying the same amount in mortgage as we were previously paying in rent. It’ll now stay that way for the next few decades if we choose.

  48. Your reasons to fight your ego list is a good one and has lots of great items, but for me the biggest one isn’t on there and it’s one word – “cozy”. I realize it’s not for everyone, but there’s something to be said about a cozy house that has functional spaces that you need, and nothing more. Being in large empty spaces to me feels, well, empty. And I’ve sen that WSJ house-use map before and find it to be true with my friends who have large houses. They mostly use only a few spaces.

    Good luck with the new offer.

  49. I got really lucky as my wife is perfectly content with the house I bought at 23. It’s not the world’s biggest townhouse but it does the job, with 3 bedrooms, which is fine for my wife and two kiddos :) While it’s fun to look around, we haven’t pulled the trigger on anything because, one we don’t need to and secondly why buy something unless it’s on sale :)

    1. TheRunningMan

      Yep, been in our starter home for over 23 years. 12 years ago we decided to renovate some rooms vs buy a new bigger home. Now the kids are gone, we have more space than we need, and we are debt free. No regrets here.

Leave a Comment

Your email address will not be published. Required fields are marked *