Starter Homes vs. Forever Homes – You have to start somewhere.
If you are considering getting into the housing market but can’t yet afford your dream home, a starter home can help you achieve your goals. As one of my clients recently stated about the house she and her husband purchased, “It’s not our dream home, it’s our reality home”. The reality is real estate prices are increasing rapidly, inventory is low and there are numerous qualified buyers. There will never be a less expensive day to buy than today.
A starter home gets you in the door of homeownership. It might be a condo apartment, townhouse or older house. It may not have every amenity or as much space as a forever home, but the main feature of a starter home is affordability. A forever home is a home that you can envision yourself in for the next 20-30 years, featuring more of your wants, rather than needs.
You may think waiting is a better option. But holding out on homeownership until you can afford your forever home will postpone your opportunity to build wealth sooner.
Benefits of buying a starter home:
- Affordability
With mortgage rates at historic lows, it is likely more affordable to own a home rather than rent. If you are willing to be flexible on features or location, you will likely be able to find a more affordable home. Spending less each month on housing means less time to save for a downpayment while building equity.
- Wealth Building
A starter home helps you build wealth by building equity in your home (the difference between how your mortgage and your property’s value) and your home appreciating in value. You have to live somewhere so why no pay into your own future, rather than paying to your landlord’s?
- Long-Term Asset
Ideally, by the time you outgrow your starter home, you will have built up significant equity. If you have the financial means, you could rent out the starter home as an additional income source.
A starter home gives you experience owning a home and the financial benefits that go along with it, without the pressure of finding your forever home now.
Debbie Braun, Realtor at Keller Williams
