I read something from a real estate blogger that has stuck with me since: People often pay for a bunch of space they do not need, even use. The argument that the space is an option is the same argument used to justify why someone would need to keep some random piece of garbage in their garage, taking up space. "This is a potential hobby of mine, so I am keeping this around," says a guy on the "Too much clutter in your house" reality show.
The disconnect here is that what people HOPE to use is not what they are using in REALITY. Buy what you expect to use immediately or in a definite foreseeable future with a timeline. Get rid of things that merely represent possibilities; in many cases, those things become obsolete anyway. You might as well try to get a return on your investments when others might find immediate value on them.
When it comes to square footage, this is like any other investment on potential. If it is not exercised, then it sits there, taking the extra heating and cooling, adding to your taxes, and so forth. Buying bigger than you need has more costs than the initial sale. A good budget keeps in mind all these flows.
A lot of people are willing to pay for 'possibilities.'
In other words, they derive intangible value by keeping that possibility around, regardless of how often they may actually exercise the option it gives them, if ever.
Many people have vacation homes or own boats that they rarely use, and could probably rent (on an as-needed basis) more cheaply, but the value to them is not simply in their actual use of the house/boat/whatever, but in the ownership itself. They derive value and enjoyment simply from the knowledge that they could go use the house, or take out the boat, whenever they wanted, even if they don't actually exercise that option very often.
It may not be a wholly rational choice when viewed from a purely economic perspective, but that's because humans aren't anywhere close to rational economic actors if you fail to take into account intangibles.
> When it comes to square footage, this is like any other investment on potential. If it is not exercised, then it sits there, taking the extra heating and cooling, adding to your taxes, and so forth.
You're ignoring the intrinsic value of space, the value of privacy, and so on.
That's why I asked about a greenbelt around a city. It's land that just sits there, yet people seems to value that.
I could cram all my stuff into about 1/4th the space. It would be quite busy. Space makes it tranquil.
The disconnect here is that what people HOPE to use is not what they are using in REALITY. Buy what you expect to use immediately or in a definite foreseeable future with a timeline. Get rid of things that merely represent possibilities; in many cases, those things become obsolete anyway. You might as well try to get a return on your investments when others might find immediate value on them.
When it comes to square footage, this is like any other investment on potential. If it is not exercised, then it sits there, taking the extra heating and cooling, adding to your taxes, and so forth. Buying bigger than you need has more costs than the initial sale. A good budget keeps in mind all these flows.