Just a few months ago, this article was published about how first time homebuyers are skipping the starter homes and saving up for bigger houses in the suburbs. Per the study used in the article, first time homebuyers view the home buying process as overwhelming and would prefer to do it as few times as possible. While this seems like a good idea on the outset, there are some points to consider first. Here’s a look at the pros and cons of the starter home.
What is a starter home?
First, let’s define the term “starter home”. The truth is a starter home is simply the first home a new homebuyer can afford to purchase. The reason the term became widely used is because most first time homebuyers have more modest budgets to work with, therefor initially buying smaller homes that may have only 1-2 bedrooms. Since these homes can more easily outgrown with the addition of children, they are often referred to as “starter” homes.
The most obvious reason to buy a starter home is budget. In tight markets with rising home prices and lower inventory (ahem, Nashville), the dream house may be far too expensive for a first time homebuyer. However, with rising rent rates buying a home still proves to be a wise financial choice in the long run. Thus, first time homebuyers might have to start looking at smaller homes or homes that need a little more work than the brand-new construction found in the suburbs.
Another pro for the starter home in Nashville is the housing market itself. With home prices soaring, it’s likely that even a modest starter home will increase in value over a short period of time. And if the market continues to stay this strong, selling the home will be no problem either. In fact, starter homes are often the homes that turn a higher profit when sold, especially if the homeowner adds upgrades or repairs before selling. Homebuyers are then able to use the equity toward the next home, which could help make that dream home more affordable.
For young homebuyers who aren’t fully settled the starter home makes the most sense. If you are unsure about job, marriage, life choices that may still come about then a modest starter home makes far more sense than a more expensive house.
Another possibility for the starter home is that it can become a rental home later too. This then provides an additional stream of income, which many homeowners appreciate.
Of course, if a homebuyer can already afford to buy a larger home in an area that they know they want to stay in long term, it makes sense to go ahead and buy it. Often, homebuyers know the community they want to be part of and are willing to wait until they can afford to buy in that area.
If you are too busy or uninterested in a home that requires fixing up or upgrades, then you’ll probably want to skip the starter home. Finding a modern, new home that is move-in ready comes with a much larger price tag. If that’s a priority, keep saving until you can afford to buy it rather than getting bogged down in a home you are unsatisfied with overall.
Bottom line: most people buy the best possible house they can afford. Starter homes are a great fit for those with more modest budgets, but they aren’t the only option. Either way, buying a house you love should be the main objective!
Are you on the market for a new Nashville home? Contact DeSelms Real Estate at 615.550.5565 and let one of award winning agents help you find either your starter home or dream home today!