Long time readers might recall I did a post a while back on how much house do you really need. Well I have been thinking how much does it really cost to have a few extra square feet. So I started digging into costs.
First off I realized how building prices vary heavily depending on what you finish the house with and what features you want. I saw prices ranging from $60/sq foot for a house built using the owners labour and lots of recycled materials to over $200/sq foot for the high end homes with granite counter tops. Please note this doesn’t include the land cost. So for this exercise I just settled on using a nice round number of $100/sq foot.
Then I calculated the extra mortgage costs associated with that square foot. Assuming a 25 year mortgage at 5.5% paid monthly that $100 sq foot would cost you $83 in interest. So right now I’m up to a total of $183/sq foot.
After that we still have to heat that sq foot. So to be fair I just assumed a 25 year time frame like the mortgage using a energy efficient furnace and today’s natural gas prices (ie: I used my own house as a model). I came out with about $17/sq foot for heating.
Therefore in total an unused square foot in your home costs you about an extra $200 over a twenty five year life span. Please note I didn’t include any maintenance costs for that extra square foot, so it reality it would cost you more (Oh yes, you will also have a higher property tax rate as well).
So in my case I would estimate without the daycare in the house we could get by with about 300 sq feet less than we current have. So 300 sq ft x $200/sq foot = $60,000 over 25 years or $2400/year. In my case the daycare has to turn a profit of $200/month to offset the extra cost of just having a larger home. Now if you don’t have a side business all that unused space in your home is just eating up your hard earned money.
So next time you feel the need to get a larger home I highly suggest you first think that extra space in terms of cost. After all it’s a bit more eye opening to realize one little extra 10 foot by 10 foot room is going to set you back at least $20,000.