Supersize That House, Please
Were I naive, I would believe this is occurring because of the old business axiom "supply follows demand". But are these opulent homes being built because the public is clamoring for them? No, I don't believe it for a minute. If you look at the economics of home construction and sales, it is easy to see they are being built because it makes more money for everyone involved. What is a home, after all, if not a box full of air! The larger the rooms and the higher the ceilings, the less it costs per square foot (or, should I say, per cubic foot) to build. The more air the home encloses, the more it can be sold for... leading to greater realtor commissions and builder profits. I am not implying any nefarious motives to anyone concerned. In fact, in a pure business sense I must applaud as maximizing profit is good business practice... nothing more and nothing less. And... it takes a big crew to build a big home!
The unintended consequences, however, are troubling. First, a growing population of lower-income buyers are forced to purchase older homes because there are no new homes in an "affordable" range. Older homes are ok... most people never buy a brand new home... but the day-to-day maintenance costs of a similarly-sized older home can be surprisingly high. And though we can appreciate the difficult job a home inspector faces when examining an older home, the sad fact is that many deficiencies are missed not due to incompetence but because inspectors don't have precognition or x-ray vision. New homes, on the other hand, can have a "grace period" of minimal maintenance varying from 5 to 10 years... barring contractor error, manufacturing defects or acts of God.
Middle-income buyers are often tempted by eager realtors and liberal lenders to overbuy into these coveted neighborhoods, leading to a precarious financial trap. Husbands and wives often work long hours to afford these homes. If either loses their job, their home is lost very quickly as the oppressive mortgage and tax payments quickly use up their savings. Even in single income families, a layoff that might have been a difficult but manageable setback becomes a disaster. Too late, they realize their home has truly owned them... and was not a benevolent master!
Robert T. Kiyosaki, author of "Rich Dad, Poor Dad" steps on lots of toes by challenging the notion that a home is an "asset". "When downsizing (corporate layoffs) became the "in" thing to do, millions of workers found out a house, their largest so-called asset, was eating them alive." He goes on to say, "What they thought were assets could not help them survive in a time of financial crisis". Continuing, "I see so many young couples who get married and trap themselves into a lifestyle that will not let them get out of debt for most of their working years."
There is nothing wrong with wanting a better life for yourself and your family. There is even nobility in the struggle to keep ahead of the bank and the taxman. Like it or not, making lots of money by working hard and working smart is the only sure way security can be achieved... at least in a capitalist society such as ours. But we must also save smart or our years of hard work can be totally wasted!
Kiyosaki urges us to keep a sensible balance between needs and wants and work towards accumulating real assets... income generating real estate, stocks, bonds, mutual funds, intellectual property, etc. For example, rather than impulsively purchase a new item, such as a car or golf clubs to replace one that still works well; invest the money and work towards your family's security. Or purchase used and invest the difference.
This sensible way of looking at wealth, money and possessions requires both understanding and discipline. And the willingness to view sacrifice as intelligent planning. It has been forever said that the one defining difference between psychological maturity and immaturity is the ability to control impulses and delay gratification. For some of us, it may be time to grow up.
If you are interested in finding our a little more about this great book on teaching your children about money, click here.
Have a small home repair question for THE NATURAL HANDYMAN? Just click here www.naturalhandyman.com/aitikia
For more home repair information, visit NH's growing list of original home repair articles and quality links www.naturalhandyman.com
If this information has been valuable to you, please consider making a small donation to support NH's free service to the home repair community! For more information, please visit our "Friends" page www.naturalhandyman.com/friends
The Natural Handyman Site Directory
- Home Repair Articles www.naturalhandyman.com/iip
- Home Repair Links Library www.naturalhandyman.com/linkslibrary
- NH's Bookshop www.naturalhandyman.com/bookshop
- Find a handyman at www.naturalhandyman.com/network
- Win unique home repair gifts and prizes at www.naturalhandyman.com/contest
Please read the important copyright and disclaimer information is located at www.naturalhandyman.com/copyright
Take the Next Step
Also in Home
- Cleaning the things that clean
- Painting a basement floor
- Make your own laundry detergent
- Inexpensive backyard play areas
- Buying a new furnace
- Recycling 'gray' water
- 6 cheap, effective home security solutions
- 5 simple and affordable luxuries for your home
- 5 frugal ways to expand your living space
- Top 10 DIY mistakes made by home 'handymen'
- How spring cleaning can save you money
- 4 secrets to budgeting for a home purchase
- Find the best mortgage rates in your area
- 3 ways to use a mortgage calculator
- Mortgage calculator: Calculate your payment and more
- Home equity calculator: HELOC vs. line of credit
- Mortgage refinance break-even calculator
- How much money can I borrow for a mortgage?
- Who offers the most home insurance discounts?