As our lives evolve, so do our housing needs. The primary reasons most people will upsize are lifestyle specific: Adding New Members to The Family, More Space for Visitors, Work from Home/Enhanced Work-Life Balance, or Storage and Organization Needs. But I want you to ask yourself, is there a time when upsizing might make senst in your total wealth picture? Can owning a bigger home be part of your wealth strategy?
Most would think: more expensive home, bigger mortgage, higher interest payments, right? Well, that is right in most cases, however, it is only part of the story and a drastic oversimplification of the actual picture. Over a period of years, a larger home is more likely than not, to make a net positive impact on your total wealth picture.
The short answer for "why?" this is the case is the difference in appreciation potential between your new and existing homes. All else being equal, at 6% annual appreciation (Colorado 20 year average), a Million Dollar Home will appreciate much faster than a half million dollar home in a simple linear equation. Even when we account for a larger mortgage, increased insurance, and increase in maintenance cost and utility bills, the return from the appreciation on the home far outstrips any additional cost to own that larger home.
By incorporating features like an in-law suite, renting on Airbnb, or upgrading the living space, your home becomes a powerful wealth-building tool. These improvements can either generate direct income or, at the very least, significantly boost the property's value.
Lastly, upsizing can be a forward-thinking decision that prepares you for future life changes. Whether you're planning on having children, caring for aging parents, or simply anticipating a shift in your lifestyle, a larger home provides the space and flexibility to adapt to whatever life throws your way.
Many homeowners who upsize find that they don’t have to move again for many years, as they’ve already planned for potential life changes. Having extra room can give you peace of mind, knowing that you won't outgrow your space as life progresses and you will build wealth in the process.
If you’re ready to explore the benefits of upsizing, give me a call, I offer a free Real Estate Review and I have tools to show you exactly how much a new home can earn you. The results might surprise you.
