Living in a smaller house can have some often overlooked benefits. For some time there has been an increasing trend in housing towards larger homes. This was certainly evident in Australia during my upbringing in the 90s and 00s. The average size of new homes in Australia surged by 50 per cent between the mid-1980s and 2010. For a period of about 15 years prior to 2012, the average new house in Australia was bigger than that in the United States.
This trend has since reversed, with homes built in 2015 averaging 231 square metres, down from a record 247.7sqm in 2008-09. With house pricing in Sydney and Melbourne achieving above 13% growth rates annually it’s no wonder the trend for smaller housing is growing. The large home dream with double garage, outdoor entertainment area, and two or three bathrooms is now falling out of even the above average income earners reach.
This may not be ideal for some, but I wanted to share some of the benefits of living in a smaller home to those who might be considering downsizing or who aren’t pleased at the thought of buying a smaller home when the larger ones are outside of their budget.
In 2011 we bought our first home. It was a humble three bedroom home with study, one bathroom, one lounge room and a single garage and most importantly was within the budget we had set. We have been here for 6 years and plan to stay here as long as we possibly can. Here are 13 Benefits of Living in a Smaller Home and why we at least for the foreseeable future plan to stay in our cozy abode.
1. Your mortgage or rent payments will be more affordable
You can’t argue with that. The smaller the home the less you are going to have to fork out for it in rent or mortgage payments each week. I’ve never really understood the mentality where people buy huge homes, which come with huge housing expense outlays each week.
Those same people then proceed to work more and more in order to keep up with their mortgage repayments, leaving them with less time to enjoy their beautiful home or spend time with their family.
2. You’ll buy less stuff to fill it up
What happens when you have two lounge rooms as well as a theatre room, three bathrooms, a guest room, on top of four bedrooms and a study? You inevitably fill it up with stuff. Have you ever walked into a lived in home that left rooms empty? Of course not, who wants an empty room? We don’t want to look poor.
Buying all that extra stuff adds up. The extra lounge at $2000, extra buffet or hutch at $700, another bed $1500, quilt $150, rug $300, TV $2000 and so on. Think of how much money could be saved if you had less space to fill.
3. You’re not throwing money away in unnecessary storage space
I am a massive fan of housing shows and always find it so bizarre that people insist on buying a huge homes with excess space, no matter how many people are living in the home. One episode a bachelor bought a 4000 square foot home just for him. The logic is baffling.
Others pay for a guest room week after week year after year for the two weekends in a year they have guests. If you work out the math, say 10% of your floor space x your weekly mortgage payment x 52 weeks in the year you could be throwing away $2600 a year on a guest room on a $500 a week mortgage that is only utilised 2 of those 52 weeks a year.
Others pay for a third garage to store boxes of unused stuff they probably don’t need and could just donate or sell. If they bought a home with only two garages or one, they could be savings thousands a year in mortgage repayments (not to mention the money they could earn from selling that unnecessary stuff!)
4. You spend less time cleaning it
There is nothing I love more about having a smaller home than the fact that it only takes me 35 minutes to vacuum and mop my entire house. We have one bathroom and one toilet to clean. One living area. On the weekends this couldn’t be more ideal as we can get our cleaning done fast and go our and enjoy our day.
If you pay for a cleaner it is going to cost you extra each week to cover the additional spaces you need cleaned, so although the house doesn’t take you longer to clean personally, it will cost you more on your cleaning bill.
Got a huge backyard? Well you’re going to be stuck mowing that football field for a couple of hours every few weekends. If you are not a huge fan of that chore it is going to get old fast.
5. You spend less on repairs and maintenance
The more space you have in your home, the more it will cost you in repairs and maintenance. If you need recarpet it, you will be paying a lot more to cover the extra floor area than you would have in a smaller home.
Having a smaller home gives you the ability to save on renovations. Get the renovation you want without spending as much as much as you would of for a larger home.
6. You’ll save on council rates and insurance
By having a smaller home and land size you will pay less in council rates (or land taxes) that are calculated on the size of your land. Your home and contents will also be reduced if your home is smaller and less costly to re-build and you have less possessions to replace in the event of an emergency.
7. You can pay off your mortgage faster
When you have a smaller home, the smaller mortgage that comes with that makes it a lot easier to pay it off and achieve financial freedom. Instead of slogging it out for 30 year you could pay off that mortgage in 20 or 15 years or sooner saving you tens of thousands of dollars in interest.
8. You can invest the mortgage savings
Imagine your $750 weekly mortgage repayment on a house that is possibly a bit on the big side for your or your families needs. It’s got a spare room that you don’t need, you don’t use the backyard and you’re sick of cleaning three bathrooms.
Let’s imagine for a minute that instead of repayments being $750 a week, you downsized to a smaller home and your new repayments are only $650. Consider now what you could do with that spare cash each week. It’s real money that you can utilise.
If you were willing to downsize to a smaller residence you could invest that $100 a week. Over 15 years and with only a 3% return (Ubank and ING Savings Maximiser current rates) you would have accumulated over $98000. If you invest it elsewhere with a higher return that amount will only increase!
Or even putting that $100 a week away would give you $5200 a year to take your family on an annual holiday or put onto your mortgage to pay it off faster. When your money isn’t tied up in your housing you have more options.
9. You’ll save on Utility bills
The larger your home the harder and more costly it will be to heat and cool it. I’ve heard stories of bill shock where people have moved into a larger home and see the first electricity bill has doubled from the prior one. If you downsize, you will get the added benefit of downsizing your utility bills.
10. You’ll have more time
Having a larger home means working more hours and for more years to make the mortgage repayments, keep up with the rates, maintenance etc. The bigger it is the more time you are going to spend cleaning it. Downsize to a smaller home and watch your time free up for more enjoyable activities.
11. Your home will fell more cosy and connected
Having a large home can often feel a bit isolating. One of you is at one end and the other at another end of the house. I find comfort knowing that our home is more cosy, homely and compact and less isolated and empty.
12. It will help you to avoid the clutter monster
Having limited space for stuff will help you to have reasonable limits for how much stuff you can bring into your home. A three bedroom house sets the limit of your stuff to those three bedrooms whilst five gives you the ability to clutter up an additional two rooms.
13. You can free up money for other enjoyable activities
Minimalism helps you revalue your priorities and find what is truly crucial. This helps you to minimise the excess and focus on the essential. When you realise that you don’t need a huge home with excess storage and a theatre room and gym with a basement you can find the money for more meaningful pursuits.
For us that is travel. We would not be happy with a larger home if that meant that we had to travel less, if at all. Maybe spending less on your housing will free up some cash to spend on your child’s dance classes or be the difference in going out as a family once a week as opposed to once a month.
Do you live in a smaller home? Share the benefits that you have found in the comments below!