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Is Your Home The Right Size, From a Financial Standpoint?

Finding the right size house for your needs and budget can be tricky. Comparing your options to the average house size is a good place to start.

April 19, 2022

We all need a roof over our heads — but how much space we actually need is open for debate. 

In America, the typical household has approximately 829 square feet of living space per person (explained below). 

But is all that space really necessary? And, more importantly, is having such large living spaces financially affordable? 

This article will discuss everything you need to consider when figuring out how much space you need in your next home. Let’s start by painting a picture of the average house size and the average living space per person. 

Average house size

The average size of a single family house in the U.S. is 2,261 square feet, according to data from the 2020 US Census Bureau. 

Compared to other countries, houses are quite large in the United States. This is partly because of zoning laws, which often encourage the use of larger single-family homes. It’s also because larger homes are not that much more expensive to build, and big homes often have better resale value. 

The average house size in the U.S. is starting to decrease, however. In 2015, the figure peaked at 2,687 square feet for new construction and has since dropped to 2,261. 

Average house size of single-family homes

  • The median size of newly constructed single-family homes was 2,261 square feet

  • The median size of newly sold single-family homes was 2,333 square feet

Source: US Census Bureau

Average house size of multifamily units (apartments, condos, etc.)

  • The median size of multifamily units built for rent was 1,075 square feet

  • The median size of multifamily units built for sale was 1,306 square feet

Source: US Census Bureau

Average square footage per person

As of 2021, American households have 2.51 people living in them on average. With the median house size being 2,261 square feet, that’s an average of right around 900 square feet per person. 

However, the calculation above only looks at single-family homes. The math gets a little more nuanced if you want a true average. A more accurate estimate that includes apartments and duplexes is 829 square feet per person (math below). 

The vast majority of American households live in single-family units. According to 2021 data, there are 208.4 million single-family dwelling units in the U.S., and only 37.8 million multifamily units (like apartments, duplexes and condos). 

That means roughly 85% of homes in the U.S. are single-family, while only approximately 15% are multi-family units.

Therefore, the weighted average square footage per person is around 829 square feet. 

How much space do I need?

The amount of space you need in your next home depends on several factors:

  • The size of your family

  • Whether or not you work from home

  • Whether or not you have hobbies that require extra space

  • Whether or not you want a garage, or amenities like walk-in closets 

Sure, the typical American has around 829 square feet of living space (per person) but the reality is: many of us don’t actually use much of this space on a daily basis. 

If you’re shopping for a new rental or planning to buy a house soon, it’s wise to spend some time thinking about how much space you need: 

  • Think back to your past apartments or houses and how much space you had there

  • Think about family members’ houses, friends’ houses or rentals you’ve stayed in

  • Consider renting a smaller Airbnb or VRBO to test out a more compact living space

Future considerations

Before making a decision, try to think ahead: 

  • How long will you likely live in this new home? 

  • Do you plan on starting a family soon?

  • Do you have a partner? If so, what are their needs and wants when it comes to living space?

Finally, think about resale value. Larger homes tend to fetch higher prices, and there’s a more limited market for one-bedroom homes, for example. 

How much house can I afford?

There are various ways to measure how much house you can afford. One popular option is the 30% rule, which states that you shouldn’t spend more than 30% of your income on housing costs. 

If you make $4,000 per month, that means you’d aim to spend $1,200 or less per month on housing. If you and your partner make a combined $7,000 per month, you could afford up to $2,100 per month. 

If you’re planning to buy a home, you can also use a house affordability calculator to get a better idea of how much you can afford. 

If it feels like you won’t ever be able to afford a house, you could think twice about your space needs. Opting for a smaller home could potentially save you a lot of money, especially over many years. 

Maintenance & utility costs

When considering costs, the mortgage or rent cost is the primary driver. However, it’s also important to consider other related costs.

  • Maintenance costs: The larger the home, the more homeowners can expect to pay in maintenance costs. 

  • Utility costs: Certain utilities — like electricity, heat and water — will be proportional to the size of the home. Other utilities — like waste removal, cable and internet — will be similar regardless of house size. 

  • Insurance costs: Homeowners' insurance is based on the value of the home. Because larger homes are usually more expensive, they will typically have higher insurance costs

It’s also wise to think about the “time costs” of owning a larger home. Cleaning a 2,000 square foot home will take twice as long to clean as a 1,000 square foot apartment. These expenses (financial & time) can really add up over time. 

Renting vs buying

If you’re buying a home, you’ll need to consider maintenance costs, insurance costs, utilities, etc. But you’ll also need to consider the potential resale value of a larger home. Have larger homes appreciated more than smaller homes in your area? Use a site like Zillow or Redfin to look at historic data. 

If you’re renting, the primary focus will be on your monthly rent costs and utilities. You won’t need to worry about resale value or maintenance expenses. 

Wrapping up

Many Americans have more living space than they really need. If you’re getting ready for a move, it’s wise to think carefully about how much space you actually need — and how much you can afford. 

If you slim down your living space, you’ll also slim down your monthly expenses — leaving more room in your budget for investing, paying off debt and other financial goals.  

If paying off credit card debt is on your financial to-do list, Tally† might be a good fit for you. Tally helps qualifying applicants consolidate credit card balances to pay it off faster. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.