Is Sun Country Buying Too Much Home?

Do you really need a larger home? This question may seem counterintuitive coming from a real estate agent.

Here's a case for buying a less expensive home: Financial experts say a good rule of thumb is to spend about 2.5 times your gross annual salary on a home and to keep your housing payments around 25-30 percent of your monthly income. The top 20 percentile

of earners nationwide know this; they spend 29.9 percent of their monthly income on housing, while the bottom 20 percent pay almost 40 percent.

In Sun Country, which includes all townships and boroughs in Elizabethtown Area, Derry Township, Lower Dauphin, and Palmyra Area school districts, the median home sale price in 2019 was just under $225,000. The median family income is $63,888. So, in 2019, we spent 3.5 times our annual income on our homes (for a breakdown by school districts, see accompanying graph). Translation: we are purchasing more home than experts say we should, by about 50 percent.

What does this mean for you and me? We, on average, have less money for other wealth-building activities. What could you do with more money in your pocket each month? Pay extra on your mortgage so one day we'll be mortgagefree. It only takes an extra $100 each month going toward principal to pay off a 30-year mortgage in 24 years and save thousands of dollars in interest.

Save money to buy another property where renters pay your mortgage as you build wealth.

Invest more for retirement and benefit from compounding interest and peace of mind.

Kelly and Chris Hollenbeak of Derry Township have done all three.

"I was always taught," Kelly said, "the best thing we can do for our children is to create a good retirement fund. We were careful to purchase a home that would be comfortable but allow us to save for our future. We avoided debt like the plaque and slept better at night knowing we were living well within our means. We've tried to model this for our children and help them learn, in a world full of one-click shopping, social media pressures and instant gratification, that contentment is key; it's not the size, but people and relationships that make a house a home."

Erika and Bruce Decaster moved their family of five to Derry Township in 2019 and promptly purchased a home. Their purchase reflects their values.

"Having a home we can easily afford opens our finances to enjoy life today as well as 20 years from now," Erika said. "With a smaller mortgage payment, we save for the future and also enjoy travel and recreation with our family without a lot of stress. This improves our quality of life right now. I believe everything requires prioritization and all good things require sacrifice. We don't want to sacrifice our time and energy for other people's priorities."

Maybe you can't do much to change your income status, but the vast majority has the choice to live within their means and learn, as Rachel Cruz teaches in her book "Live Your Life, Not Theirs," contentment is not a financial destination, it's a place we live emotionally and spiritually as we love and appreciate what we have.

Eileen S. Voyles is a REALTOR® with Berkshire Hathaway HomeServices Homesale Realty. She can be reached at 717-533-8181 or evoyles@homesale.com.

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