Starter Home Vs. Forever Home

Starter Home vs. Forever Home.

Which is right for you?

Have you been looking forward to home ownership but found that your dream home is out of reach? You are not alone. But that doesn’t mean you should abandon owning a home. Continuing to rent while you save toward a down payment for a large home could be riskier than you think. Many people find that re-adjusting their dream to reflect their current needs makes more sense in the long run.

First, let’s talk about the “Forever Home.” HGTV originally coined this term, and later it was widely promoted by both the mortgage and real estate industries as the ultimate goal for homebuyers. However, the notion of a Forever Home is dated and doesn’t work for everyone. The one constant in life is that it is constantly changing, and chances are that the home you purchase today will not be your “Forever Home.”

In the Dallas-Fort Worth area alone, homeowners move into a new home on average every ten years, according to NAR. That number decreases even more if you live in an urban area. According to Realtrends.com, Dallas homeowners stay in their homes for only seven years!

So, why not live in a home that works for you now?

The Benefits of Starter Homes

Affordability:

Why pay for space you don’t need? Or live in a locale you don’t love? A 1-2 bedroom townhome or condo is generally more affordable than a large home and allows you to own a house without waiting years to save a larger down payment. If you love the urban lifestyle, why not enjoy city living without the huge price tag? You may be able to enjoy more amenities or nicer finishes throughout your entry-level home vs. stretching your budget to buy a larger property in a less desirable locale that you don’t even need right now.

Flexibility:

Change is inevitable, and with that, our housing needs often change as well:

• Job changes or the need for more space are common reasons for a new home. Perhaps, you need space for a growing family. Or, later, when your children move out, you may want to downsize or move to a different community altogether.

• You may love your spiral staircase now, but that might not work for you as you age.

• As you grow older, so does your wealth typically. With more wealth, you may desire a completely different type of home and lifestyle.

Buying is Often Cheaper than Renting:

According to the Dallas Morning News, the average cost of a 2-bedroom rental in Dallas is $2,000 per month. And, due to projected population growth, rents have been rising 30% year-over-year with no end in sight. Here’s an interesting tool from nerdwallet.com that will help you personalize the rent vs. buy comparison for yourself. Most people find that the monthly cost of owning a starter home is very close to their cost of renting a home or an apartment. However, after 3-5 years of being locked into a consistent monthly payment while rent prices continue to rise, homeowners can see significant savings.

It's An investment in Your Future!

By making a smaller investment in the housing market now, your money is trending in the market you ultimately want to invest in. For example, if you are saving money to purchase a $500,000 home, that same home could be $550,000 in 2 years, assuming a modest annual increase of 5%. That can seem like an impossible game of catch-up if you’re paying high rent and trying to save. However, if you buy an entry-level home today for $300,000, you will likely see an equity increase of $30,750 over the same 2-year period, increasing your buying power when making your next home purchase.

Whatever you decide to buy, there are many factors to consider. Feel free to reach out to explore the best options for your situation.​​​​​​​