House vs Happiness

[REatc]

Projecting into the future a little bit, I have a math over emotion problem.
Our current home is a definite starter home, with its mortgage payment laughable to me, I have a lot left over each month to invest. In a few years when we move, I would like to get a nice home, potentially the forever home (or at least next 10years home). The nice home would be 3x what our starter home payment is. This already makes me nervous thinking about it. It already has me in the pay off your house club vs invest, maybe because it’s too much house. We can definitely “afford” the nice house by everyone else’s standards, but to me it makes us invest less a month than I would like. Anyone here buy probably too much house but not regret it in hindsight, or regret it lol?
I heard a quote on ChooseFI the other day and it is resonating with me a lot: Build the life you want, then retire into it! Having a nice home is definitely part of the life I want.

Starter home now: 215k value
Future decent home: 400k-450k
Future nice home: 600k-650k
No homes in between 450k and 600k because I think I  can’t justify the price for what you get. I’d rather get a slight less nice home for 450k or a way nicer home for 600k.

[CodingHare]

I think it depends on how long you expect to be there.  We bought a "nice home" that was way more than the starter home I was envisioning, but due to location and style of home it is our 30-40 year home.  It will be easy to adapt to old age since it is a single story, it has room for kids if we want them, and right now it has room for us both to have office space for our remote work.  And an acre for gardening/light homesteading, which was a long term goal for us.

How much nicer?  In Seattle home prices, it bumped us up from okay homes with less yard, more housing development style living ($500k-600k in the areas we were looking) to a well built 80's rambler with an acre of land ($700k).

If you had told me I was only going to be here for 10 years, I would have stuck with a cheaper home.  But given a 30 year plus ownership, then why spend 10 years of your life in a place that isn't optimal?

Note that another big factor was our interest rate being dirt cheap.  It makes owning a lot of debt not too bad.

[Cranky]

Why can’t you be happy in a starter home?

Full disclosure - we’re getting ready to move to another state this year when dh retires, but that’s because we want to live in a different area for family reasons. But we’ve been in our starter house for 25 years. We couldn’t be more comfortable and I’ll be sorry to leave it.

[StashingAway]

No homes in between 450k and 600k because I think I  can’t justify the price for what you get. I’d rather get a slight less nice home for 450k or a way nicer home for 600k.

This analysis breakdown is weird. That's like saying that you'll only marry someone who is between 5"1' and 5'4" or 5'9" and 6' because... the value of people who are 5'5"-5'8" isn't great for what you get?

People value homes differently. I would pay an extra 50K to be next to a street with good bike lanes that gets me to a grocery store. I also put less value on school district lines than other folks. I also don't mind a fixer uppers. So a home that's valued at 400k with those features is a steal for me.  Some people pay a premium for a nice big lawn but all I see is maintenance. In other words, how happy you are is relative. I'm perfectly happy in my "starter" home. I also am looking forward to the next house, but if I'm here forever then that's cool too.

What if you buy a 300K home but fix it up to a 500K home over then next 10 years? Where does that fit in your artificial limits? Or if you buy a cheaper house but use that spare $ to retire sooner and travel more? Have you read the blog for some of these insights?

Maybe post a case study in that section to see what house you could afford from mustachian standards, if not to see what other people would do in your situation.

[Morning Glory]

Why do you want a nicer house? Is your current house not meeting your needs? e.g. bad floor plan, not enough beds/baths, wanting to expand the family, kitchen too small, no garage, no garden, etc.

How do you define nice? Just bigger, better location, newer, older, better finishes, more land? Can you remodel your existing house to get what you want?

I have a way too big/nice house that requires a lot of time consuming and expensive maintenance. 100 year old house with huge barn and 18 acres, tons of trees near the house that always need trimming and mowing around, tractor for snow removal, need to maintain tractor, riding mower, truck. Stuff in the house always breaking or just looking dirty and messy. Junk accumulating. Outside landscaping looks like shit because we just don't have time. I am sick of all of it.

We landed in this house because our old one was not meeting our needs when we wanted to have children (tiny kitchen, only one bathroom, bad floor plan). I really just wanted a bigger kitchen and a second bathroom, but the husband mentioned a dream of always wanting to live in the country, so here we are. The location is close enough to town that I can still bike to work, and the views are pretty, I will give it that.  We both got something we wanted, just didn't realize that we were buying a job. 

I am trying to talk my spouse into selling it and buying a modest home for cash with the equity that we have in it, thus completely eliminating the mortgage payment, cutting the utilities, taxes, and maintenance costs substantially, and also reducing the amount of time needed for maintenance. We have enjoyed this house but we have little children and we can't really keep the house maintained and looking nice, so it is a lot of stress.  Kids would be happier in a neighborhood too because they would have friends to play with.

[ixtap]

Why do you want a nicer house? Is your current house not meeting your needs? e.g. bad floor plan, not enough beds/baths, wanting to expand the family, kitchen too small, no garage, no garden, etc.

How do you define nice? Just bigger, better location, newer, older, better finishes, more land? Can you remodel your existing house to get what you want?

I think this is the most important aspect. Without answering these questions, it may become a case of "the grass is always greener," but a move and more money wouldn't necessarily solve your actual problems.

If you can afford "nice" (whatever that means to you), by all means go for it. Just be sure that you have thought through your family's criteria, not some suburbia checklist that doesn't actually suit you.

[REatc]

We will be moving across the country back closer to family. Whatever we end up choosing will be a nicer house than what we currently have. We will be moving to downtown Houston area. So it’ll be a question of having zero outdoor space vs small backyard vs balcony. As you can imagine a zero outdoor space will be cheapest. Balcony only home will be middle priced. A backyard is a premium.

[Metalcat]

We will be moving across the country back closer to family. Whatever we end up choosing will be a nicer house than what we currently have. We will be moving to downtown Houston area. So it’ll be a question of having zero outdoor space vs small backyard vs balcony. As you can imagine a zero outdoor space will be cheapest. Balcony only home will be middle priced. A backyard is a premium.

Yeah, these are all kind of important details to know.

As for the yard, you need to evaluate what really matters to you. FTR saving money isn't something that can make you happy, so comparing an expensive piece of land to the happiness of saving is nonsense.

You have to compare it to the tangible thing you are actually trading off, which is free time, ability to retire sooner, etc, etc.

Look at what that additional money could actually *buy* you and compare which matters more. That's the only way to decide.

And yes, many, many MANY people have bought their "dream" or "forever" home and deeply regretted it. 

[CodingHare]

We will be moving across the country back closer to family. Whatever we end up choosing will be a nicer house than what we currently have. We will be moving to downtown Houston area. So it’ll be a question of having zero outdoor space vs small backyard vs balcony. As you can imagine a zero outdoor space will be cheapest. Balcony only home will be middle priced. A backyard is a premium.

I mean, a backyard was something really important to my SO and I that we decided was worth the premium.  But to someone else a yard is just a ton of mowing effort and equipment for little return and actually a detriment.  Seconding you need to evaluate what it is worth to you.

[Nutty]

Backyard was important for our dogs, so we wound up farther out with cheaper land and a 30 minute commute.  You mention Houston and I guess inside the loop.  Sounds like you get to prioritize, evaluate and compromise.

We bought a larger house with a yard (for cheaper cost, but longer commute) for raising kids.  It sounds like you know how much inside space you want.  So the decision is only the outside space?  Parks vs backyard vs greenspace?  All that will play into the location you want to be near.  Houston is a commuter city and you pay for location.

Best wishes in your decision from the east side

[poetdereves]

Not really answering your question, but just wanted to pipe in with the fact that I totally understand what you mean about the decent vs. nice dilemma and having a gap between prices. We are in a $200k house that suits us well currently, but with the plan of children on the way, DW working from home, and other things that we'd like to have in our home we are either looking at slight changes for $300k that still lacks a lot of what we'd want in a long term home, or $500k+ for a nice home. There's not a lot of in between here either. Good luck!

[Dreamer40]

I'm 40 and recently bought my nice forever home. I have zero regrets and am regularly amazed at how much happier I am just because of the house. I'm a generally frugal person who finds a lot of happiness from spending a lot on a house. Living in small dark apartments and houses until now has really made me appreciate it.

Part of the happiness comes from the size and style of the home. Part of the happiness is also location because family live down the street. They're all also in their own happy homes so none of us are going anywhere any time soon. I like my family.

But overall, it's the house I want to spend all my time in. The reason I saved all that money in my youth and worked in that stressful high-paying job was so I could someday live this life in this house. But I could always sell it if I changed my mind for some reason.

So I think it just comes down to what you want. If you know what you want, you get joy from doing stuff at home, and you can afford it, get it. I didn't know what I wanted for a long time so I waited and saved money until I figured it out.

[reeshau]

To @Malcat 's point:

Starter home now: 215k value  and retire at 40
Future decent home: 400k-450k  and retire at 50
Future nice home: 600k-650k  and retire at 60

This would be one way to think of a tradeoff.  $400k is no small amount.  It will take working harder / taking risks at work / promotions with worse work/life balance / keeping the nose to the grindstone longer.  Of course, you could get a lot more land living outside the loop,  it then have to contend with Houston's hellacious commute.  (Or, make sure you do not have to contend with it)  But you need to crystallize these priorities to think it through, and communicate them if you want people's opinions.

Otherwise, we'll all just say to save your money, as the only dimension seems to be money.  And, well, you are at a place about early retirement, after all.  Do take @Morning Glory 's input about what else comes with a bigger house.  Texas has no state income tax, so guess where the money comes from?  Watch those property tax bills when you talk about affordability.  And in Houston, make sure you know your flood maps!  Lots of "bargains" come with flood histories.

P.S.  We are coming from Dublin Ireland, knowing walkability here would be laughable compared to there.  We couldn't choke down the prices downtown to be walkable.  We love the Woodlands!  But, we do not have to commute.  That would be a soul-killer. Our big splurge was a pool.  Totally worth it, especially this year.

[Dave1442397]

I visited a friend in Houston one summer, and he said the only time he ever went outside to his back yard was to grill burgers/steaks. I remember mostly running from one air-conditioned place to the next. It was hot as hell outside (but way more humid), but if you went to a restaurant you needed a ski jacket to stay warm.

[reeshau]

I visited a friend in Houston one summer, and he said the only time he ever went outside to his back yard was to grill burgers/steaks. I remember mostly running from one air-conditioned place to the next. It was hot as hell outside (but way more humid), but if you went to a restaurant you needed a ski jacket to stay warm.

Well, it was 70 degrees here today, and zero inches of snow.  You just came at the wrong time; kind of like visiting New Jersey in January, and wondering what's the big deal about the Jersey shore...  :)

As a former Minnesotan and Michigander, I have come to understand that Houston's winter--the weather that keeps you inside--happens in July and August.  Your reward each year for enduring "winter" is October - April.  We spent nearly every day of "winter" in the pool.

[Zinsch]

Want to emphasize the point that you should try to calculate how many more years you have to work before you can retire, depending on which house you buy, and then evaluate whether it's worth it.

Maybe retiring at 40 with a starter home is better than retiring at 60 with a fancy house. Depends what you want to do with your life.

[vand]

We moved from a 400k house to a 826k house last year after some careful consideration.
https://forum.mrmoneymustache.com/uk-tax-discussion/financial-plan-for-moving-to-bigger-house/

A big decision and commitment, but it is working out nicely now.

Yes it has definitely set our FI date back by a few years, but we are fine with that. We’ve kept the old place and turned it into a rental to try to plug the difference in cashflow, and the new home let’s us take advantage of better childcare arrangements too.

[Dicey]

Buying and selling houses is freaking expensive. I'd advise skipping one of those steps.

FWIW, I live in a ridiculously lovely custom built clown house that we bought because it suited our family's needs when my MIL and her pal Al Z. Heimer needed to live with us. DH walks three and a half blocks to work. We will probably not keep it forever, but it has been glorious living here.

ETA: In case I wasn't clear enough, I'm surprised at how much having a nice house contributes to my  happiness, especially during this pandemic. For me, it's less House vs. Happiness, and more House = Happiness.  At the very least, it's a strong component my happiness and overall sense of well-being.

[Freedomin5]

PTF as we will likely be purchasing a $500K+ home sometime in the next 3 to 5 years.

I think you need to first figure out what you need/want in a home to be happy. What is considered enough for you? Then figure out how to get that for the least amount of money possible.

For example, for us, the non-negotiables are:

- At least 3 bedrooms, 2 bathrooms (preferably 4 to 5 bedrooms)
- In a specific (expensive) neighborhood with good schools

However, instead of paying a premium for a fully renovated house, we are willing to do some of the renovations ourselves. We are also looking for a place where we can potentially rent rooms out to help defray the cost of the mortgage. However, the layout should also be flexible enough that we can still use the rooms for other purposes if we choose not to rent them out.

[vand]

I agree that you should do that whole scenario A vs scenario B thing and work out what it sets you back in terms of your overall journey to FI.

A lot of it is dependent what saving rate you are current managing - if you have a high saving rate already then the overall impact may only be small, but if your saving rate is mediocre (by MMM standards) then the effect can be huge.

Lets say you are on $150k household income and managing to to stash away $100k/yr for a 66.6% saving rate.. 400k mortgage costs about $20kpa over 30 years, so buying the new home takes you down to $80k saving. you still have a better than 50% saving rate, and your journey time to FI is only increased by about 4-5 years.

But now take the $150k income and say you are "only" managing to saving $50k, for a 33.3% saving rate. Now that $20k mortgage reduces your saving rate down to 20% and your journey time balloons from about 24 to 37 years, adding another 13 years. Ouch! You are not really fasttracking FIRE now, you are pretty much doing what you need to for standard retirement around 60-65.

(Of course I'm simplified a little and not accounting for taxes, other associated costs etc)

[jrhampt]

I visited a friend in Houston one summer, and he said the only time he ever went outside to his back yard was to grill burgers/steaks. I remember mostly running from one air-conditioned place to the next. It was hot as hell outside (but way more humid), but if you went to a restaurant you needed a ski jacket to stay warm.

Well, it was 70 degrees here today, and zero inches of snow.  You just came at the wrong time; kind of like visiting New Jersey in January, and wondering what's the big deal about the Jersey shore...  :)

As a former Minnesotan and Michigander, I have come to understand that Houston's winter--the weather that keeps you inside--happens in July and August.  Your reward each year for enduring "winter" is October - April.  We spent nearly every day of "winter" in the pool.

Agreed; I grew up in Texas.  However, I am in New England now because I feel having the nice weather in the short dark days of the year is a waste of the long days we get in the summer.  I'd rather have long nice summer days spent outdoors.

[reeshau]

I visited a friend in Houston one summer, and he said the only time he ever went outside to his back yard was to grill burgers/steaks. I remember mostly running from one air-conditioned place to the next. It was hot as hell outside (but way more humid), but if you went to a restaurant you needed a ski jacket to stay warm.

Well, it was 70 degrees here today, and zero inches of snow.  You just came at the wrong time; kind of like visiting New Jersey in January, and wondering what's the big deal about the Jersey shore...  :)

As a former Minnesotan and Michigander, I have come to understand that Houston's winter--the weather that keeps you inside--happens in July and August.  Your reward each year for enduring "winter" is October - April.  We spent nearly every day of "winter" in the pool.

Agreed; I grew up in Texas.  However, I am in New England now because I feel having the nice weather in the short dark days of the year is a waste of the long days we get in the summer.  I'd rather have long nice summer days spent outdoors.

That's a fair point.  Fortunately, while we stick around for school for our DS, we are FIREd and can travel during "winter"--reverse snowbirds!  And even now, we have 11 hours of sunlight--plenty of time to be outside.  So we won't need to miss out on anything.

[Just Joe]

If you are a DIY person look for something that needs simple TLC. We bought a house in the right spot with 10+ acres in the country about 10 minutes from work. Benefits of a smallish town. Its been a comfortable place to cope with COVID. We really just enjoy staying home. Our kids will be at home another decade or so. The cost has not derailed our retirement plans.

This house needed some repairs, needs interior painting (this year), kitchen needs some remodeling (this year), and the house would benefit from detail upgrades. Nothing expensive since we can DIY and wait for sales. Its bones are good. I think the previous owners were not DIY types and they were tired of it so they let it run down a bit. Evidence of low cost choices. Property values are rising in our area so with ~$30K of remodeling, I think the home value will increase in value multiples of that. 

In a HCOL area we would make a very different set of choices. Probably live in a small house with an apartment lifestyle (much less stuff, no pets, one car if possible). Minimize cost, maximize trips away from home.

[GoCubsGo]

I had this push/pull for most of my adult life.  I bough my first home at 26, it was definitely not a starter house size wise, but was similar price to a starter (I gut rehabbed it for 8 months).  Over the years, we looked at many homes and actually offered on a couple.  Mostly because we could easily "afford" it, given a normal retirement timeframe.  Then I became more frugal and didn't even consider it.

Fast forward, now I have a paid of home in a swanky suburb and can retire in my 40's because of it.  That said, we have 2 teenage kids.  Our house wasn't the hang out spot because the kids just hung out in the McMansions (and actual mansions) in my neighborhood.  My wife recently said that bothered her all these years (I wish she would have said it back then).  I think she would gladly work a few years more if we had a do-over.

Something to think about if you have kids.

[slappy]

I had this push/pull for most of my adult life.  I bough my first home at 26, it was definitely not a starter house size wise, but was similar price to a starter (I gut rehabbed it for 8 months).  Over the years, we looked at many homes and actually offered on a couple.  Mostly because we could easily "afford" it, given a normal retirement timeframe.  Then I became more frugal and didn't even consider it.

Fast forward, now I have a paid of home in a swanky suburb and can retire in my 40's because of it.  That said, we have 2 teenage kids.  Our house wasn't the hang out spot because the kids just hung out in the McMansions (and actual mansions) in my neighborhood.  My wife recently said that bothered her all these years (I wish she would have said it back then).  I think she would gladly work a few years more if we had a do-over.

Something to think about if you have kids.

I have three young kids and this is something I think about, and it does concern me. Our house and lot don't really leave a lot of room for adding on. We do love the house and the lot, though, so we will probably try to figure something out for adding on a sunroom or something like that. The kids love the huge backyard now, but I'm sure as teenagers "playing outside" will not be such an acceptable pastime.

[2sk22]

We thought that the house we currently live in would be our starter home but 25 years later, we are still here. We have however, over the years, progressively remodeled every part of the house to our needs. Depending on where you live, remodeling a home may be more cost effective than moving.

[Morning Glory]

If it is your dream to have a big house, go for it. You can always sell it later if you decide you don't like it any more.

My Update: I got my husband convinced that we need to sell our big house and move to a smaller one.  Plenty of decent houses in our area in the 200K range that would meet our needs perfectly, as long as we don't care about having the newest finishes.  Our house appraised at $415K last year and we could probably get $450K if we did some major cleaning up and minor repairs. We owe $198K on our mortgage.  I want to sell it first then either put a contingent cash offer on another house or just rent for a bit if we don't find something suitable right away. 

I think downsizing would increase our happiness because we would not be spending all of our free time maintaining our house, and our fixed expenses would be lower also, giving us more to spend on travel and entertainment.  I could probably even lean FIRE if we moved to a cheaper area, but I like my job for now and I want to see what our expenses are like in a regular house before I pull the plug.

Things we want:
3 or 4 bedrooms
1.5 or 2 bathrooms
1000-2000 square feet (no more than 2000)
good sized kitchen with either an island or room for a table
walkable neighborhood 
city water and sewer
natural gas heat
nice deck or patio

Nice to have:
south facing roof for solar panels
2 car garage
gas stove
double oven
close to a park (like having a big yard but not having to maintain it!!)

Stuff we don't want:
Acres of land
Multiple outbuildings
Hundreds of trees
Swimming pool
Long driveway
Huge house
Leaky basement
Septic system
Propane
Roofline that gets ice dams

[REatc]

Thank you all for your input. I like hearing each person’s different perspectives.
I did the math on how long it would take each house to payoff: 400k house (4.5yrs), 500k house (6yrs), 600k house (7.5yrs). And how much more I would have in investments if I didn’t pay them off until retirement: 400k for 400k house, 200k for 500k house, 0k for 600k house. Now just a matter of discussing it with myself on what I value the most.

[REatc]

Another thought would be how comfortable are you with your mortgage payment relative to take home pay? More specifically I guess, how much is the Max you are comfortable with a mortgage payment being (PITI) as a percentage of take home pay. Assuming maxed out retirement accounts already.

[AMandM]

If you have children, an important factor to consider is whether a fancier house means a fancier neighbourhood, where the people who will be your kids' friends and models will have a lifestyle you don't want to emulate. If all the kids except yours are getting bouncy houses for their 2nd birthday, cars for their 16th birthday, vacations to South Africa or Bali every year, that will be very hard on your kids.

[kevj1085]

I think you'll get a different answer from everyone. Our house is 1,950 sq ft, 5 bedrooms, so literally it's just a big open living room attached to an open kitchen with bedrooms surrounding that area all across the side, and we are a family of 4 with 3rd kid on the way. No desire to move because it fits our criteria...everyone has a bedroom, there's some.back yard, garage gym, driveway to park, big central playground with open grass fields, it's safe, and paid off. To me it's just a place to come back to after a day of being out to eat, rest, change clothes, gather, and recoup before going out again. Some people like to make their home some kind of kingdom to spend their time in 24/7, to me it's just a means to be in until the next adventure, so, less spent on it, more spent being out and active.

[Metalcat]

I think you'll get a different answer from everyone. Our house is 1,950 sq ft, 5 bedrooms, so literally it's just a big open living room attached to an open kitchen with bedrooms surrounding that area all across the side, and we are a family of 4 with 3rd kid on the way. No desire to move because it fits our criteria...everyone has a bedroom, there's some.back yard, garage gym, driveway to park, big central playground with open grass fields, it's safe, and paid off. To me it's just a place to come back to after a day of being out to eat, rest, change clothes, gather, and recoup before going out again. Some people like to make their home some kind of kingdom to spend their time in 24/7, to me it's just a means to be in until the next adventure, so, less spent on it, more spent being out and active.

OP clarified that the significant difference between these houses isn't the houses but the presence or absence of outdoor space.

In your personal example you are saying that your house structurally already has everything you want, so why bother paying more. In OP's case, they're saying that spending less would mean giving up a potentially major desired structural element.

I too own an affordable home that provides me everything I need, so I don't care about how fancy it is, but if a key functional element was taken away, I would absolutely be willing to spend double or triple what I paid. I just lucked out that what I wanted, which is rare, happened to be cheaper.

[Freedom2016]

Decisions like this are so personal.

I feel very strongly about the place I spend most of my time, and for me I would *not* trade earlier retirement for a less- or not-pleasing home: "Oh, yay! I can stop working... and spend more time in a shitty house that I don't love!" It probably matters that I do like my work and have lots of autonomy so I'm not desperate to RE the way some people are.

About two years ago we moved into what I consider our forever home. By mustachian standards it is facepunch-worthy (3000 sqft), and it has most of the features on morningglory's "stuff we don't want" list. Yet we still have the daily experience of feeling very lucky to live here, almost pinching ourselves with our good fortune. For us, it's worth it.

[Dicey]

Thank you all for your input. I like hearing each person’s different perspectives.
I did the math on how long it would take each house to payoff: 400k house (4.5yrs), 500k house (6yrs), 600k house (7.5yrs). And how much more I would have in investments if I didn’t pay them off until retirement: 400k for 400k house, 200k for 500k house, 0k for 600k house. Now just a matter of discussing it with myself on what I value the most.

What rate of return on your investments did you use for those calculations?

[Dicey]

If it is your dream to have a big house, go for it. You can always sell it later if you decide you don't like it any more.

My Update: I got my husband convinced that we need to sell our big house and move to a smaller one.  Plenty of decent houses in our area in the 200K range that would meet our needs perfectly, as long as we don't care about having the newest finishes.  Our house appraised at $415K last year and we could probably get $450K if we did some major cleaning up and minor repairs. We owe $198K on our mortgage.  I want to sell it first then either put a contingent cash offer on another house or just rent for a bit if we don't find something suitable right away. 

I think downsizing would increase our happiness because we would not be spending all of our free time maintaining our house, and our fixed expenses would be lower also, giving us more to spend on travel and entertainment.  I could probably even lean FIRE if we moved to a cheaper area, but I like my job for now and I want to see what our expenses are like in a regular house before I pull the plug.

Things we want:
3 or 4 bedrooms
1.5 or 2 bathrooms
1000-2000 square feet (no more than 2000)
good sized kitchen with either an island or room for a table
walkable neighborhood 
city water and sewer
natural gas heat
nice deck or patio

Nice to have:
south facing roof for solar panels
2 car garage
gas stove
double oven
close to a park (like having a big yard but not having to maintain it!!)

Stuff we don't want:
Acres of land
Multiple outbuildings
Hundreds of trees
Swimming pool
Long driveway
Huge house
Leaky basement
Septic system
Propane
Roofline that gets ice dams

Some thought from someone on the Road Ahead:

It's nice that those downsizing options are available to you. If less maintenance is important, it might be worth buying something smaller and newer. Smaller homes can be maintenance nightmares, too.

Since you like your job, another strategy to consider would be to buy with a mortgage while you're still working, because original purchase by fully employed individuals is absolutely the cheapest mortgage money available. You can pay it off early if you wush, but when these incredibly low interest rates are gone, they're not likely to return. Grabbing the cash now is a good strategy for your future. For those who think life will be great when there's no mortgage to pay, I offer that it is an utterly amazing and powerful feeling to watch your investments earn more than you ever did working,  and that you can pay your mortgage off any time you want.

A mortgage would allow you to buy first before you sell your current home, thus eliminating a move. Moving isn't free and it's a pain in the ass. Plus, it's far easier to sell a home when you aren't living in it.

I'm not sure how old you are, but if it will be your forever home, you might want to add Accessible Design to your list.

Whatever you decide, congratulations on your success to date!

[Morning Glory]

If it is your dream to have a big house, go for it. You can always sell it later if you decide you don't like it any more.

My Update: I got my husband convinced that we need to sell our big house and move to a smaller one.  Plenty of decent houses in our area in the 200K range that would meet our needs perfectly, as long as we don't care about having the newest finishes.  Our house appraised at $415K last year and we could probably get $450K if we did some major cleaning up and minor repairs. We owe $198K on our mortgage.  I want to sell it first then either put a contingent cash offer on another house or just rent for a bit if we don't find something suitable right away. 

I think downsizing would increase our happiness because we would not be spending all of our free time maintaining our house, and our fixed expenses would be lower also, giving us more to spend on travel and entertainment.  I could probably even lean FIRE if we moved to a cheaper area, but I like my job for now and I want to see what our expenses are like in a regular house before I pull the plug.

Things we want:
3 or 4 bedrooms
1.5 or 2 bathrooms
1000-2000 square feet (no more than 2000)
good sized kitchen with either an island or room for a table
walkable neighborhood 
city water and sewer
natural gas heat
nice deck or patio

Nice to have:
south facing roof for solar panels
2 car garage
gas stove
double oven
close to a park (like having a big yard but not having to maintain it!!)

Stuff we don't want:
Acres of land
Multiple outbuildings
Hundreds of trees
Swimming pool
Long driveway
Huge house
Leaky basement
Septic system
Propane
Roofline that gets ice dams

Some thought from someone on the Road Ahead:

It's nice that those downsizing options are available to you. If less maintenance is important, it might be worth buying something smaller and newer. Smaller homes can be maintenance nightmares, too.

Since you like your job, another strategy to consider would be to buy with a mortgage while you're still working, because original purchase by fully employed individuals is absolutely the cheapest mortgage money available. You can pay it off early if you wush, but when these incredibly low interest rates are gone, they're not likely to return. Grabbing the cash now is a good strategy for your future. For those who think life will be great when there's no mortgage to pay, I offer that it is an utterly amazing and powerful feeling to watch your investments earn more than you ever did working,  and that you can pay your mortgage off any time you want.

A mortgage would allow you to buy first before you sell your current home, thus eliminating a move. Moving isn't free and it's a pain in the ass. Plus, it's far easier to sell a home when you aren't living in it.

I'm not sure how old you are, but if it will be your forever home, you might want to add Accessible Design to your list.

Whatever you decide, congratulations on your success to date!

Thank you Dicey.  Buying with a mortgage would be the best move financially. I don't pay extra on my current mortgage, and I agree with you that buying with a mortgage and investing the cash would be a better move.  I thought maybe a cash offer would shorten the time to closing, allowing us to wait until we have an offer on the current house before looking for a new one.  Do people ever pay cash at first and then get a mortgage to invest the money?

I am opposed to buying a home before the current one sells, just because I have done it before and it bit me in the ass.  When we got this home we bought it and then waited until after we moved in to do some reno work on the old one before putting it on the market.  Our contractor was flaky and we lost most of the summer selling season, and then winter hit and buyers dried up.  We looked into renting it out but it would have been extremely expensive to bring up to city rental code, so it sat empty for about eight months while we  paid 2 mortgages and had to go over there to shovel snow and make sure the pipes didn't freeze.  I understand that the market was a totally different beast at that time, but I really, really don't want to take care of two houses or pay two mortgages again.

My husband and I are both 39, and we have two small children.  I think the new place won't be my/our forever home because I would like to move someplace warmer after retirement, maybe in as soon as 3-5 years.  I agree that a newer house would be less maintenance but the newer ones in my area tend to be out in subdivisions further away from work, schools, library, grocery, etc.  There are a lot of well built houses from the 40s and 50s that go for lower prices and also tend to be closer to things.

[Morning Glory]

Decisions like this are so personal.

I feel very strongly about the place I spend most of my time, and for me I would *not* trade earlier retirement for a less- or not-pleasing home: "Oh, yay! I can stop working... and spend more time in a shitty house that I don't love!" It probably matters that I do like my work and have lots of autonomy so I'm not desperate to RE the way some people are.

About two years ago we moved into what I consider our forever home. By mustachian standards it is facepunch-worthy (3000 sqft), and it has most of the features on morningglory's "stuff we don't want" list. Yet we still have the daily experience of feeling very lucky to live here, almost pinching ourselves with our good fortune. For us, it's worth it.

My current house has all of the things on that list. We just got rid of the swimming pool a year ago, but it still has the rest of them. We are in a beautiful location and get lots of compliments on our home, and we enjoyed it for some time.  We even had a whole little hobby farm going on with fruit trees and chickens, and I thought I would maybe like the homesteading life.  After kids came we started to get behind on the maintenance as free time came into short supply, and it all just felt like work. I also started to feel trapped due to the fact that I would not be able to handle things on my own if something happened to my husband.

Now we are just burnt out and I am particularly tired of never taking vacations.  I enjoy spending time in nature/the country side but there are plenty of nice parks within reasonable driving distance of my town, and having a cheaper and easier house will allow us to spend more on travel too. 

One nice thing about deciding where to live is it doesn't have to be permanent.  If you think you want something you can try it and you are not out too much if you decide it isn't for you. 

[reeshau]

Do people ever pay cash at first and then get a mortgage to invest the money?

You can, but that is considered a cash-out refinance, so the interest rate will be higher.

[Dicey]

Do people ever pay cash at first and then get a mortgage to invest the money?

You can, but that is considered a cash-out refinance, so the interest rate will be higher.

Yup. Thanks reeshau!

[REatc]

Thank you all for your input. I like hearing each person’s different perspectives.
I did the math on how long it would take each house to payoff: 400k house (4.5yrs), 500k house (6yrs), 600k house (7.5yrs). And how much more I would have in investments if I didn’t pay them off until retirement: 400k for 400k house, 200k for 500k house, 0k for 600k house. Now just a matter of discussing it with myself on what I value the most.

What rate of return on your investments did you use for those calculations?

I use a real return of 5% for all my compound interest calculations, even for very long term compounding. It may be a low return expectation, but I’d rather be more conservative than not. And it’s an easy way for me to put future value into today’s dollar value.

[trygeek]

As somone who has done this keep that starter home they make great rentals and they will move your fire date closer. Perhaps closer than the big house pushes it back. If you hate being a landlord hire a company to do it for you and you will never get a call just a check in the mail.

[Dicey]

Thank you all for your input. I like hearing each person’s different perspectives.
I did the math on how long it would take each house to payoff: 400k house (4.5yrs), 500k house (6yrs), 600k house (7.5yrs). And how much more I would have in investments if I didn’t pay them off until retirement: 400k for 400k house, 200k for 500k house, 0k for 600k house. Now just a matter of discussing it with myself on what I value the most.

What rate of return on your investments did you use for those calculations?

I use a real return of 5% for all my compound interest calculations, even for very long term compounding. It may be a low return expectation, but I’d rather be more conservative than not. And it’s an easy way for me to put future value into today’s dollar value.

Well, doesn't that skew all these payoff times? Why not use historical numbers rather than an "easy" one that has no actual basis? It kinda feels like you're skewing the inputs to get the answer you want. There's an IT term for this: GIGO.

[REatc]

Thank you all for your input. I like hearing each person’s different perspectives.
I did the math on how long it would take each house to payoff: 400k house (4.5yrs), 500k house (6yrs), 600k house (7.5yrs). And how much more I would have in investments if I didn’t pay them off until retirement: 400k for 400k house, 200k for 500k house, 0k for 600k house. Now just a matter of discussing it with myself on what I value the most.

What rate of return on your investments did you use for those calculations?

I use a real return of 5% for all my compound interest calculations, even for very long term compounding. It may be a low return expectation, but I’d rather be more conservative than not. And it’s an easy way for me to put future value into today’s dollar value.

Well, doesn't that skew all these payoff times? Why not use historical numbers rather than an "easy" one that has no actual basis? It kinda feels like you're skewing the inputs to get the answer you want. There's an IT term for this: GIGO.

Wouldn’t a lower interest rate be better for a hypothetical measure? If you get a better return (probably more likely), then your numbers are even better. Wouldn’t using the historical return of 7% after inflation be a little generous if your timeline is 10years or less?

[Dicey]

Thank you all for your input. I like hearing each person’s different perspectives.
I did the math on how long it would take each house to payoff: 400k house (4.5yrs), 500k house (6yrs), 600k house (7.5yrs). And how much more I would have in investments if I didn’t pay them off until retirement: 400k for 400k house, 200k for 500k house, 0k for 600k house. Now just a matter of discussing it with myself on what I value the most.

What rate of return on your investments did you use for those calculations?

I use a real return of 5% for all my compound interest calculations, even for very long term compounding. It may be a low return expectation, but I’d rather be more conservative than not. And it’s an easy way for me to put future value into today’s dollar value.

Well, doesn't that skew all these payoff times? Why not use historical numbers rather than an "easy" one that has no actual basis? It kinda feels like you're skewing the inputs to get the answer you want. There's an IT term for this: GIGO.

Wouldn’t a lower interest rate be better for a hypothetical measure? If you get a better return (probably more likely), then your numbers are even better. Wouldn’t using the historical return of 7% after inflation be a little generous if your timeline is 10years or less?

Remember in school when they said to show your work? You said you did the math, but you haven't shown how you reached your conclusions. Why not use the actual historical average over a made-up number? Again, looks like GIGO. It's fine if you do you, but the information you've provided doesn't seem to "prove" anything. Also, being overly conservative isn't really the way of the Mustachian. I'm not suggesting taking ridiculous chances like, say,  day trading, but being so conservative and unwilling to learn why that might be suboptimal isn't the swiftest path to FIRE. That's the whole point of this forum, right? Your presence here indicates at least some degree of interest in the concept.

[LD_TAndK]

Anyone here buy probably too much house but not regret it in hindsight, or regret it lol?

My anecdote: My wife and I got sucked into fulfilling all our wants (though it's hard to decipher what was actually our own wants vs. society, friends, and family's influence) and ended up in a way too big clown house. PITI was 23% of our after tax income so not frugal but not crazy.

We're now in the process of downsizing to a much smaller place. We'll save a ton of money, but is was mostly about feeling like I wasn't living in alignment with my values. Ultimately the wastefulness of the place grated on me.

To the question of a backyard, I learned I'd rather have a neighborhood with greenspace than my own private backyard.

[TomTX]

Why can’t you be happy in a starter home?

Full disclosure - we’re getting ready to move to another state this year when dh retires, but that’s because we want to live in a different area for family reasons. But we’ve been in our starter house for 25 years. We couldn’t be more comfortable and I’ll be sorry to leave it.

++

While our current house is bigger than our first house, many people would still consider it a "starter home" - we moved cities, and the price difference between ~1200 square feet and ~1700 square feet was pretty minimal at the time, plus larger yard for gardening.  Since going 100% WFH, I've been extremely thankful for the additional space.

[ender]

We bought on the higher end of the range I wanted to spend (but still within that range). I am really happy we bought the house we did.

Our house is perfect for our needs, wants, and family activities/structure. It is more than sufficient for the next 25 years of our lives.

We got the core things we wanted and also were able to get many of the "nice to have, but not going to make/break" things too.

The only thing that we'd change is location to be not a suburb but an acreage - but this is something that when we bought, would have been insanely more expensive and push us way out of our price range. It's possible at some point our priorities will change and we will move but until that happens, we're really happy with this house.

About two years ago we moved into what I consider our forever home. By mustachian standards it is facepunch-worthy (3000 sqft), and it has most of the features on morningglory's "stuff we don't want" list. Yet we still have the daily experience of feeling very lucky to live here, almost pinching ourselves with our good fortune. For us, it's worth it.

+1

Our house is about that size and we also have the same experience. I feel so fortunate on a regular basis to live here house. I love seeing our family using the spaces in this house.

[norajean]

Long term home ownership is rare because life has a way of intervening. It would be best if you planned for 5-7 years ownership but built in flexibility if you did stay forever.

Many people make the mistake early in life of focusing on the structure of the building (four bedrooms! A 3car garage!) and forgetting the critical aspects of location and setting. A suburban tract home is never going to be anything more than that. Dream homes start with spectacular locations and outdoor surroundings, whether proximal to nature or man made diversions.

[bmjohnson35]

I can't answer your inquiry directly, but I can share my own lessons learned.  We sold our "forever" home about 4 years ago, so  I could take the equity to take advantage of the incredible stock market and fast track us to our early retirement.  We didn't really think of it as a forever home, but in hindsight, it really was.  We moved into a low cost rental for a year and later purchased a home cash in preparation for early retirement.  We didn't buy the house we wanted and instead compromised.  I'm not absolutely sure I would do things differently in hindsight, but I probably would not. We did manage to eliminate our house debt, buy a house cash and get back to our original brokerage account balance within an incredible short time period. We bought a home that spouse does not like. I completed a lot of renovations and thought it would grow on her and I was wrong.  If we had spent another $25-$50k, I'm sure we could have ended up in a house we could have both been satisfied with.  We will end up selling in 2 years, which is when the 5 yr grace period for capital gains under Obamacare rules arrives.  If the real estate market continues to climb and doesn't correct soon, this means that we will have to purchase a substantially higher cost home, which means we will have higher long-term home ownership.  This means the taxes, insurance and possibly HOA dues will all be higher than originally planned.  It won't cause me to return to work, but it will be a negative impact to our original cost forecasting.  Everyone's situation is different.  The key is determining what is truly important to you and make sure you align your priorities with your strategy.   

[Dicey]

I can't answer your inquiry directly, but I can share my own lessons learned.  We sold our "forever" home about 4 years ago, so  I could take the equity to take advantage of the incredible stock market and fast track us to our early retirement.  We didn't really think of it as a forever home, but in hindsight, it really was.  We moved into a low cost rental for a year and later purchased a home cash in preparation for early retirement.  We didn't buy the house we wanted and instead compromised.  I'm not absolutely sure I would do things differently in hindsight, but I probably would not. We did manage to eliminate our house debt, buy a house cash and get back to our original brokerage account balance within an incredible short time period. We bought a home that spouse does not like. I completed a lot of renovations and thought it would grow on her and I was wrong.  If we had spent another $25-$50k, I'm sure we could have ended up in a house we could have both been satisfied with.  We will end up selling in 2 years, which is when the 5 yr grace period for capital gains under Obamacare rules arrives.  If the real estate market continues to climb and doesn't correct soon, this means that we will have to purchase a substantially higher cost home, which means we will have higher long-term home ownership.  This means the taxes, insurance and possibly HOA dues will all be higher than originally planned.  It won't cause me to return to work, but it will be a negative impact to our original cost forecasting.  Everyone's situation is different.  The key is determining what is truly important to you and make sure you align your priorities with your strategy.

Uh, what does this have to do with Obamacare?