BUYING A HOME
Starter Home vs. Forever Home: Pros & Cons
by Matt Carson 10 minute read
In today's housing market, a growing number of first-time homeowners are opting to skip over the traditional ‘starter’ home and purchasing their 'forever' home first. This is the home that they plan to live in for the rest of their life. While this strategy of finding a home that will suit all of their future needs won't work for every first-time homebuyer, a 'one-and-done' approach is definitely worth considering.
In this discussion, we'll take a look at the top pros and cons of both a hypothetical starter home and a forever home. If you are a first-time homebuyer, we hope this will help you make a more informed decision about what kind of home you should pursue.
A quick note on terminology before we get started: We'll be using the terms 'starter home' and 'forever home' quite a bit here. We define a starter home as being a standard living space that likely doesn't have all the room and amenities of your dream home but is also more affordable. On the other hand, a forever home has everything you need to raise a family as well as act as your retirement home. With that in mind, let's get started.
For many, the price of the home, and how much you might need for a down payment, is one of the biggest factors in determining the feasibility of a particular house on the market. It's easy to fall in love with a home that's out of your price range (another good reason to get pre-approved early in the process), but there can be more factors in play than simply the sticker price.
Buying a home is one of the most proven and time-tested ways of building equity. It can also be one of the ways to build generational wealth. We all have to pay for the space to hang our hat, but equity allows you to eventually own that space. Renting, by contrast, is a zero-sum game, where you will never be able to own the space, and you have no control over how much you will pay to stay there.
Any homeowner can tell you that maintenance on a home can be challenging to say the least. These costs have to be factored into your overall thinking when buying a home, because when something breaks, you'll be responsible for repairing it. On the surface, it might seem like a starter home might have fewer maintenance costs, but there are a few other factors that need consideration.
With so many markets struggling with housing inventory, the availability of homes is one of the key factors in becoming a homeowner. After all, you can't buy a house if there aren't any houses to buy. It stands to reason that, depending on the market conditions in your area, finding a home that will meet your immediate needs will probably be easier to find than a dream home that checks all the boxes on your list. This can play a major part in deciding whether to go ahead and buy or hold out for something else later on.
Whether you are planning to start a new family or you need to take care of previous generations, the needs of your family will drive many of your decisions about the home you can live with. As we established, starter homes will, on average, have less space than a forever home, so this is something that you'll need to weigh when finding the balance for you and your family.
There's always more to deciding upon a home than just the home itself. You'll want to know the county or parish, so you can get an idea of the local taxes. Then you'll want to know the schools, the ease of access to public transportation or major infrastructure (or lack thereof). How far is the closest grocery store, movie theater or row of restaurants? These are all things to consider about the location your home will inhabit.
Just as forever homes are more likely to have a bigger floor plan, they are also more likely to have some built-in amenities that can make the quality of life better for you. It could be a pool, space for a gym or home office. Amenities are that 'something extra' that can really transform a home from a simple place of residence to a place for living.
Perhaps the most important indicator of whether you need to buy a starter home or a forever home is simply how well the home in question will meet your needs, both now and in the future. Life throws all manner of surprises at us, so understanding where you'll be in ten, twenty, or thirty years in the future (and what your needs at that time will be) is no easy feat.
As you can see, there are definite advantages to both approaches. Starter homes are more likely to be cheaper and allow you to start building equity sooner, but you may outgrow them in a variety of ways, given time; a forever home will probably be much more in terms of your monthly payment, but you’ll have a space with more of what you want and a lasting place to build a life for yourself.
So, if you are in the market for your first home, or you are someone who is just starting to contemplate their path to owning a home, we hope that this list has given you some important food for thought. It takes some planning, some creativity, and a healthy dose of self-discovery, but if you can explore what you need and want from a home purchase ahead of time, you can know whether your path forward is to buy your first home or your only home.
Your journey home begins here.
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