Decades ago, it wasn’t unusual for young people starting out their lives to consider purchasing a starter home – essentially a small, affordable home within their budget until the point they could purchase a larger home for a growing family as their careers advanced. As experienced Flower Mound real estate professionals who’ve seen it all, we know there are advantages to staring out small – but there are also several disadvantages which we’ll reveal below.
This first one’s a no-brainer – you’ll be moving twice! Whether you’re single or married, most young adults don’t move into a small, lower quality starter home with the intention of staying forever. Moving can cost a pretty penny depending on whether you hire someone to do the packing and hauling, not to mention the other costs of buying and selling a home, including brokerage commissions, title insurance, inspections, etc.
You won’t build up much (if any) equity if you intend to stay in your starter home only four or five years. Most people don’t live in these homes for a long time, and considering a huge portion of your mortgage payments will go toward loan interest costs over the first five years, you’ll probably have almost zero equity in your home when you’re ready to scale up.
Is it really a financially smart thing to do? For many young people, no. There are dozens of additional costs you don’t think of in addition to the cost of the starter home. Because it is your home, you’ll probably want to “make it your own,” which could mean painting the walls, landscaping, buying blinds or other window treatments, perhaps even new carpeting or flooring. Add these to property taxes and mortgage payments, and the costs could be overwhelming.
Today it’s a whole new way of life. In the 60s and 70s it wasn’t unusual for couples to buy a starter home, remain at their place of employment until retirement age, have kids, and stay put in the community, moving up to a larger house along the way. Today’s world is so much different with career-oriented individuals getting promoted – sometimes requiring a move. Divorce rates have soared, and not everyone gets married at 20 or 21 years old. It’s a mobile world, so renting for the time being and saving up for your dream home may make more sense over the long-term.
For some, a starter home may be the right move; for others, perhaps not. It’s certainly a personal decision, but one you should make after much thought and consideration.
When you do get ready to purchase a larger, more permanent home to call your own in the North Texas area, be sure to give the Dallas real estate agents at Team Nelson a call! Because we’re so familiar with the market, we can help you find the home that suits your needs in terms of space, location, design, and amenities, quickly and easily.
