Smart Moves

A colossal nine-bedroom contemporary house is under construction in a popular semi-urban neighborhood adjoining a regional park. The 14,000-square-foot residence dwarfs the 1950s-era split-level next to it.

With so much space -- plus a four-car garage with a guest apartment atop -- one might imagine that the place was designed to house a large family. But the married couple building the house will live there with just three school-age kids.

And well-off young families aren't the only ones hankering for huge houses

"A lot of boomers hanker for that 'last hurrah' house," says Merrill Ottwein, a real estate broker and former president of the National Association of Exclusive Buyer Agents (naeba.org).

A study by the American Enterprise Institute, a Washington, D.C.-based think tank, shows that even as the size of the average U.S. household shrunk between 1973 and 2014, the size of the average new home continued to rise.

"Most new home buyers of any age want as much square footage as they can possibly afford. Those seeking large custom-built houses are especially eager for a super kitchen, lavish bathrooms and huge walk-in closets," Ottwein says.

Depending on your circumstances, buying a very large property is either a solid long-term investment or an imprudent decision. Here are a few pointers for those pondering such a decision:

-- Make sure your financial house is in order before buying a big place.

Eric Tyson, an author and financial planning expert, says some who buy oversized homes do so without a careful look at the budgetary implications.

"If the bank says they're qualified for a mortgage on a big house, that's the end of their analysis," Tyson says.

For most buyers, even those with six-figure salaries, it's prudent to consider factors beyond those appearing on their mortgage applications.

"Your lender will never ask you if you've pledged to each year donate a large percentage of your income to your church or synagogue. Nor will your lender know if each year you take expensive ski trips to the Swiss Alps," Tyson says.

In addition, there's the obvious issue of your preparation for retirement. Have you saved a nest egg large enough to live comfortably in spite of the mortgage payments on a big property?

Tyson recommends that those considering a large home spend time projecting their future financial needs. Though he considers some online retirement income calculators overly simplistic, he finds others useful -- at least as a starting point. For example, he recommends the free financial planning tools available through such investment companies as T. Rowe Price (troweprice.com) and Vanguard (vanguard.com).

-- Take into account all the costs associated with ownership of a large home.

"Unfortunately, many people don't realize just how much it costs to maintain ownership of a really large house until after they've moved in," Tyson says.

Some big-home aficionados are willing to personally handle all the cleaning and small repairs involved in ownership of a big place. But there are also other expenses to cover.

"Keep in mind that you'll have to insure, furnish, heat and cool that property, as well as pay taxes on it," Tyson says.

-- Think through your assumptions about a big house as an investment.

Citing home value gains, the real estate data company Zillow (zillow.com) reports a continuing decline in the number of U.S. homeowners who owe more on their mortgage than their properties are worth. With fewer owners underwater, more can now consider selling and moving up to a larger property.

But Dr. Svenja Gudell, Zillow's chief economist, cautions prospective trade-up buyers to keep a lid on their expectations for future property value increases if they plan to buy in a metro area where prices are already high.

"A handful of markets ... are very hot right now, and it's possible home values may actually begin to fall somewhat in these places as more residents are priced out amidst affordability concerns, especially when interest rates rise," Gudell says.

No matter the market where you plan to buy or build an oversized house, Tyson says it's usually important to stay for at least five years to make it a worthwhile investment.

"In the past, many who've remained in their big houses for many years have been richly rewarded," he says.

-- Review your overall life goals before making a big home purchase.

Ottwein cites the example of a couple with six young children who could have afforded a spacious, high-end property, but chose not to buy one. Though qualified to buy a home with six or seven bedrooms, Ottwein's clients asked him to restrict their search to smaller places. In the end they picked a four bedroom, log cabin-style house with 2,400 square feet of living space.

"The house they bought was 50 percent smaller than what they could have afforded. But they wanted to use their spare cash to take their kids on educational trips abroad," Ottwein says.

Obviously, financial priorities are highly individual. For every couple who decide to buy a smaller home than their income allows, there are many willing to max out their spending on a showplace.

"If a really big, beautiful house is a top priority for you, and you've taken into account all the relevant financial factors, I say chase after that dream and make it happen for real," Ottwein says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Before Eric Tyson and his wife had kids, they spent five carefree years living in a townhouse on a busy thoroughfare in a noisy, vibrant part of San Francisco. But after their twin sons were born, they traded this starter home for one in a tranquil Connecticut suburb.

Although the couple look back fondly on their San Francisco years, they also remember the difficulty they had selling their first house because of its intensely urban location.

"Some people aren't noise-sensitive and don't care if they live in a main road. But most people want to avoid the traffic, pollution and lack of privacy that comes with such a location. They also fear more crime," says Tyson, co-author of "House Selling for Dummies."

He cautions that those attempting to sell a property set on a busy artery must price realistically or risk having the place languish unsold on the market for a lengthy period.

The good news for sellers of well-priced homes is that many cash-strapped buyers in their 20s and 30s are now eager to exit their rental units. To shoehorn themselves into their first property, many must compromise on location to obtain an affordable place, says Svenja Gudell, the chief economist at Zillow, the online real estate database company.

Sid Davis, a veteran real estate broker and author of "A Survival Guide to Selling a Home," says empty-nesters may also appreciate more urban homes. They like a location that lets them walk to coffee shops, restaurants, grocery stores and movie theaters.

Also, he says some foreign-born buyers are less resistant to living on a main road than are those who grew up in this country.

Still, Mark Nash, author of "1001 Tips For Buying and Selling a Home" says it's not unusual for homes on major roadways to sell for at least 15 percent below nearly identical houses on quiet streets in the same area.

Here are a few pointers for those trying to sell a place on a heavily traveled road:

-- Select a listing agent who sees the positives about your property.

Nash tells the true story of a couple of young homebuyers who were eager to leave the apartment they'd been renting for years in downtown Chicago.

They pair fell in love with a Tudor-style house that met all their requirements, including a gourmet kitchen. It also had the large yard they were seeking for their puppy. But it was located on a heavily traveled road.

Nash says the couple pondered the pros and cons of the purchase for several days before agreeing with the listing agent who convinced them that its positives outweighed its negatives.

"A key selling point was the very reasonable price for this house," Nash says.

When selecting a real estate agent to list your roadside home, he says it's important to choose a diligent person who exudes confidence about your ability to sell, assuming you've agreed to price your home realistically.

"You want someone who will talk up your place and work really hard to get it sold," Nash says.

-- Make the most of the visibility of your property.

Traffic congestion has one advantage for the sellers of homes on busy roads. That's because their "For Sale" signs are more visible than those who are trying to sell their houses on less traveled streets in the same community.

With so many drivers passing by, you're bound to attract the attention and curiosity of many people. With this in mind, Nash suggests you ask your agent to attach "riders" to the main sign that focus on the positive points of your property.

"Pull people into your house with signs that point out, for example, that you have mahogany built-ins, a new gourmet kitchen, two fireplaces or any other bells and whistles," Nash says.

-- Highlight the accessibility of your home to commuters.

Even in areas where traffic congestion has stayed steady in recent years, many people still loathe their long highway commutes. The result is that relatively more commuters are now willing to live on major thoroughfares, assuming this will shorten their drive to work.

"People who have to get to work quickly ... are especially keen about quick highway access. This is one positive feature of living on a main road," Nash says.

Does your roadside home offer easy access to a popular light rail line or subway system? If so, you have an even stronger positive to highlight for potential buyers, according to Tyson.

"Many people hate driving to work. So if your location makes it easy to use alternate transportation and that public transit is of good quality, this could be a huge selling point in your favor," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

A couple in their mid-30s are struggling to find an affordable house before their first baby is due in five months. That's an arduous chore because they live in an extremely high-cost area.

To meet the challenge, they're shopping rental properties -- places currently (or formerly) occupied by tenants. To land a discount, they're hoping to locate a home that needs only superficial fixes and upgrades -- work the husband, a contractor, can do himself in his spare time.

Considering their income limits, the couple in this true story have latched onto a potentially good buying strategy, says Ashley Richardson, a veteran real estate agent affiliated with the Council of Residential Specialists (crs.com).

"It's true that when you buy a rental, you're always rolling the dice to some extent because there can be hidden problems. ... But if you get a solid home inspection and can tackle many of the issues yourself without hiring out, you can buy yourself lots of sweat equity with a minimum of risk," she says.

Sid Davis, a long-time real estate broker and author of "A Survival Guide for Buying a Home," estimates that those who purchase a well-chosen rental home can save as much as 30 percent off the market value of a similar property in better showing condition.

Here are a few pointers for cash-tight buyers pondering a rental property:

-- Try to plan your first visit when the renters are away.

Those living in a rental unit are typically -- though not universally -- unhappy about the idea that their landlord is making them move.

"Lots of tenants get very angry in this situation. Even if they're not mad, they're not going to go out of their way to clean the house for a showing or to say nice things about it," Davis says.

What's more, some renters make pejorative observations about the house -- hyping minor issues and occasionally even making up problems that don't exist to discourage a sale.

Davis recommends buyers try to schedule their first visit to see a rental property when the tenants are absent. That way you can more effectively examine the place.

"When you're first looking at a place, it's a bad idea to let tenants follow you around and distract you with their comments," Davis says.

Still, if you're interested in making a second visit to the property, he says you might consider doing this when the tenants are present and can expand on any problems you've already discovered.

-- Make sure you obtain an in-depth home inspection.

Although many rental properties are overseen by professional management firms, they rarely receive the same level of attention as owner-occupied properties. That's why it's critical to make any offer contingent on a satisfactory home inspection.

To locate a highly qualified home inspector, Davis recommends you ask your agent for the names of at least 10 candidates. Then interview three by phone to determine the best one. Another source for referrals is the American Society of Home Inspectors (www.homeinspector.org).

Avoid choosing an inspector who's also in the home improvement business.

"That represents a major conflict of interest --especially if the guy presses you to hire him for repairs," Davis says.

-- Obtain cost estimates for all the repairs you'll need.

Davis once owned six rental houses. This taught him that tenants often fail to tell their landlord about problems unless they become serious.

"Perhaps the dishwasher has malfunctioned for many months. But the landlord never heard about the problem until a home inspector finds that the dishwasher leaks and must be replaced, along with the subflooring beneath," he says.

Davis says the prospective buyers of a rental property -- or any home, for that matter -- should determine in advance how much needed repairs will cost. He recommends they get estimates for all the repairs on the inspector's list before finalizing their bid. Then they should make sure these expenses are factored into the price they negotiate.

-- Place location at the top of your list.

In many neighborhoods where the real estate recovery is still robust, buyers continue to outnumber sellers. Even so, as Richardson notes, very few purchasers prowling the market are willing to consider a rental.

"These days, buyers only want a house in pristine condition -- one that's been babied by its owners. Very few people will take a 'fixer' because of all the hassles that might bring. That means you'll have fewer rivals in pursuit of a good deal," she says.

You could get an even more favorable deal if you find a house with only superficial problems in an excellent neighborhood, like one with manicured yards and top-rated neighborhood schools.

"As with any real estate purchase, location should trump every other priority when making your choice," Richardson says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)