Should you invest in a starter home?
Or is it a better idea to wait and save for your “forever” home?
First off, let’s make sure we’re talking about the same thing.
Economists often define a “starter home” as being in the lower third of a market’s valuation (as opposed to trade-up homes and luxury homes).
For many homeowners, however, a starter home isn’t about price. Instead, it’s about how long they plan to stay there — typically, only a few years.
And that’s where the dilemma really lies. That’s because buying and selling a home, as well as moving in and out, all have costs.
Also, since the bulk of the mortgage payments for those first years goes to interest, you also unlikely to build up much equity if you only own the home for a short while.
In fact, according to one estimate, the break-even point for a starter home is somewhere from 5 to 7 years. In other words, if you’re planning to stay in the home for just a few years, then it might not make sense to buy it in the first place.
So am I telling you not to buy a starter home?
Nope. There are definitely good situations in which a starter home makes perfect sense.
For example, if you’re planning on staying put for 5 or more years, a starter home will save you money on rent and will help you build up equity.
Another option is if the home has potential, and you can imagine it becoming your forever home with the right renovations or additions.
Still another is if you are open to keeping the home and renting it out later in case plans change.
Ultimately though, this will be a decision that that’s based on your own unique preferences and places.
When you weigh all of that in, if you do decide that a starter home might make sense for you, then here’s something important you should know.
The best time to buy a starter home is coming up soon.
That’s because fall is the season when starter home inventory peaks and listing prices drop, according to the real estate portal Trulia.
This means you will have the most choice, at the most affordable prices.
If you are curious what kinds of homes are becoming available around the San Antonio area right now, take a look at this complete listing:
And if you have questions about the current San Antonio real estate market, including whether a starter home is right for your unique circumstances, give me a call at 210-908-7800. I’m here to help.