Purchasing a home is a big and exciting experience! From the very start of the home-buying journey, you will have questions to answer that will shape your approach to the housing market and will ultimately shape which home you choose in the end. One of the big questions to answer is whether you are wanting to buy a “starter home” or a “forever home.” So how do you know which of these two paths is right for you? I would love to walk you through some questions that may help clarify which direction to pursue!
- What’s the difference between a starter home and a forever home?
The answer to this question will vary slightly from person to person, but ultimately, a starter home is a home that you see yourself in for a few years, before moving to your long-term location. Starter homes are usually small homes, townhomes, or condominiums that have one or two bedrooms. They may have just enough space for a person or two to live in, or a young family starting out. On the other hand, a forever home is a home that may be in a better location, have more bedrooms, outdoor space and amenities, and is ultimately a place where the owner plans to put roots down and live for many years.
- How long should you plan to stay in a starter home?
There is a sweet spot in how long to own a starter home! The longer you own the home, the better your chances are of building enough equity and of your home increasing in value enough to make a profit after buying and reselling. I would recommend planning to live in a starter home for at least two years, as selling before this point can lead to capital gains taxes that could otherwise be avoided. This also allows you time to make any needed updates to the home that would benefit resale value, as well as giving you the buffer you need to find and save for your forever home.
- What affects resale potential of a starter home?
Before putting an offer on a starter home, this is an important question to answer. The goal of investing in a starter home is to build equity and save for a down payment on your long-term, forever home, so buying a home that is likely to appreciate is most strategic. Location plays a big role in a home retaining its value, as well as the general up-keep and maintenance of the home. It can be especially beneficial if you are willing to do some minor remodeling to add value to the home before putting it back on the market.
- Can you skip the starter home and start with your forever home?
You absolutely can! Even though it is often recommended and helpful to buy a starter home at the beginning of your home-owning journey, there are definitely situations where this is not necessary. Depending on your financial situation, your family’s needs, the state of the housing market, and various other factors, it may be most strategic to rent until you are able to land a place you love for the long term. No two clients’ journeys are the same, and I would love to chat in more detail with you about what may be the best path for you and your family to “unlock new doors”!
I hope that this may have helped give a start in the decision-making process for any of you who are weighing the pros and cons of starter homes versus forever homes. If there are any other questions you have regarding this topic and what it means for your specific situation, I would be delighted to chat with you!