One of the most common considerations among first-time homebuyers is whether they should buy a starter home that will meet their needs for at least five years or move into a home that will suit their needs both now and in the future. In some cases, budget will dictate the decision, but other first-time buyers will have to think long and hard about their approach.
Starter homes are typically smaller homes or condos, not necessarily a property that is in need of a lot of repairs. Ideally, in five years, the home can be sold to move to a larger home that might accommodate an expanding family. A starter home may be more affordable for a buyer, and it’s a way to save and build equity instead of paying rent while waiting to afford a larger, more permanent home.
That’s why it’s important to choose a starter home that is likely to appreciate so that in several years it can be sold for more than the first-time buyer paid, allowing them to recoup their investment and use the equity as a down payment on a larger home. While there is no magic formula to ensure that a home will appreciate, there are some factors that play a larger role in resale than others.
Location is the biggest factor, with homes in low crime areas and near parks, open spaces, public transportation and good schools considered to be more valuable. In addition, maintaining the property will go a long way, given that curb appeal is important to buyers. However, it’s important for buyers to remember that it is impossible to predict when and where home prices will rise or drop. Because of this, it’s wise to choose a starter home that could be a long-term residence in case a longer stay becomes necessary.