4.  Should we Keep Our Existing Houses?  Should we Purchase a Larger House?

6. Introduction The topic of this research paper is the benefit vs. cost of purchasing a new house in today’s economy. Currently my wife and I own two houses, one that is our place of residence and one that is a source of rental income. We have been contemplating the pros and cons of selling both houses and purchasing a larger single home. In this paper I will analyze the costs and benefits of this decision. Background Current Residence: The home that we currently reside in is sufficiently large to accommodate our family. We own many toys (camping trailer, boat, four wheelers, motorcycle, etc.) therefore, we require a large lot with plenty of storage space for all of the toys. We enjoy spending time outdoors in the summer time and our current house has a swimming pool. Rental Home: We have been renting our investment home for about 4 years now. The home has had two different tenants during this period. There was a time between tenants when the home sat vacant for about six months. We have had moderate difficulties with tenants making payments on time, but the property has consistently been well taken care of. We have been required to visit the property about once every three months for various maintenance issues. The monthly rent is enough to cover the monthly mortgage payment a small amount extra to cover general maintenance.

7. Potential New Home: One of the main reasons for purchasing a new home is to have a floor plan which is designed more for entertaining purposes. We are generally happy with our current living arrangement, but are considering the additional “utility” we would derive from purchasing a new home. Investigation Benefits of the new home would include: better floor plan newer home better location tax advantages rid ourselves of the responsibility of renters Disadvantages of the new home would include: higher mortgage loss of rental income children having to change schools additional costs of heating & cooling for larger home

8. As we consider the list of pros and cons in the decision of purchasing a new home, one can determine that the decision is based upon wants and not needs. However, “buying a home should be approached systematically, with both eyes wide open, using your brain instead of your heart”. Currently the housing market is down at what experts are saying is close to the absolute bottom. We have taken a pretty hard hit on our existing homes as a result in the decline in the housing market. However, the price of the new home we are considering purchasing is in a different class than our existing homes. This higher class home has depreciated even further, percentage wise, than our existing homes. “Over the long-term real estate has consistently appreciated, even through periodic adjustments in local markets in response to economic conditions. On a national level, home appreciation has historically increased 5-6 percent annually”. As the housing market rebounds, we will potentially gain more equity on the new house than we would on the existing homes. Therefore, as a long-term investment it seems that the new home is the best choice. On the other side of the argument, we only owe approximately 10 years on both of the existing home mortgages. After ten years in our existing homes, we would no longer have a house payment on our place of residence and most of the rental income would become profit.

9. Summary “The change in home size seems more related to taste. In the last decade, middle-class homebuyers no longer seemed content with the humble bungalows that suited their parents. Grand entryways, spacious master suites, extra bedrooms, multiple bathrooms, media rooms, play rooms – families fell in love with the sheer luxury of these suburban homes on steroids.” This statement from the Los Angeles Times pretty much summarizes where the ultimate decision lies with me and my wife. There are many benefits and costs associated with this decision, but ultimately the decision will be made according to our tastes. Does our appetite for a grander home outweigh the safety and stability of our existing situation? I do not believe that we are ready to make that decision. Some days we are completely convinced that purchasing a new home is the best decision. Then the next day we wake up concerned with the Nation’s economy and the potential unknowns and we rein ourselves in and are once again content with our existing situation. We have committed to making a decision by next spring, so we have plenty of time to continue researching the costs and benefits of this decision. Researching and writing this paper has definitely helped bring us closer to this decision.

12. Three Votes to One!

13.  After hours and hours of research, the final decision was made by democratic process.  And The Result is:

14.  Austin, K. T. (1999). Buying a Home: Economics vs. Emotions. USA Today (Society for the Advancement of Education).   Barth, J. R., Li, T., & Palacios Jr., R. (2010, November 21). McMansion economics. Los Angeles Times.   Unknown. (2010). Is Buying a Home in Today's Economy a Good Idea? Retrieved from National Association of Home Builders: http://www.nahb.org/generic.aspx?genericCo ntentID=85147