Are Starter Homes A Thing Of The Past?
When shopping for your first home, it’s easy to get caught up on that big, family-size house and imagine growing old there. Looking forward to putting down permanent roots is normal, but your bank account and life circumstances might not be ready.
The traditional approach to home ownership has been to first buy a smaller, less expensive starter home. Build equity in the home by making mortgage payments and after a few years, you sell it and take the profits to invest in a larger, longer-term home.
Nonetheless, particularly among younger millennial buyers, a new trend has developed. Fewer buyers are looking for the traditional starter home, which most buyers stay in for about five years before trading up. More and more people are going directly to the dream home, which is usually larger with swankier finishes, an appealing location, and other amenities—along with the corresponding higher price tag.
In Bank of America’s 2018 Homebuyer Insights Report, most first-time buyers say they want to skip starter homes and instead purchase a home that will meet their future needs, even if that means holding off on buying until they can save more money.
While homes are more expensive today, (even starter homes), mortgage rates are still at historic lows. Buyers might want to pay a bit more for a larger home partly because borrowing money for a home isn’t quite as expensive as it once was.
Other borrowers are choosing to wait until they’ve saved up more money and/or have a higher income before buying their first home. In that case, they don’t have to move as many times or go through the home-selling and -buying processes as often.
But is circumventing the starter home and going straight to the roomy forever home a good idea? It’s probably not the right choice for everyone, but considering some topics may help determine the best type of purchase for your situation.
By nature, our younger years are often more unbalanced with plenty of adjustments and changes, and owning a starter home allows a little more flexibility. A starter home probably won’t have every feature you hope to have, but it’s a good-enough home for the time being, and for building equity.
Very few people stay in their home for 30-plus years anymore, especially first-time buyers whose preferences and needs are likely to transform, as well as income and family size. Typically, when the need arises, not only is a starter home easier to sell, but it’s less likely you’ll become attached to the property.
Buying at the top of your budget can cause you to be “house poor,” not only because your monthly mortgage payment is high, but also because larger homes typically require more upkeep. That’s why it’s important to have a realistic idea of your budget and goals, and realize that taking on too much could negatively affect other aspects of your lifestyle.
As you’re contemplating what kind of home purchase you’re ready for, guidance from a local Realtor can provide an abundance of helpful information. A trustworthy and reliable real estate agent based in the area you want to move to is more indispensable now than ever.
Utilizing an experienced Realtor’s resources and know-how brings another level in making the best choices to serve your needs and situation. Not only helping you find the right house, but also providing information on specific streets, cities, property taxes and school districts to give you useful tools to consider all of your options.
Colorado Springs number one independent real estate firm, The Platinum Group, Realtors have years of experience developing and refining their work. They are ready to share their expertise, knowledge on market conditions, and skilled negotiation techniques to provide top-notch management of your home purchase.
For a no-obligation consultation, call today: (719) 536-4478 or visit PlatinumHomesSales.com.