The American dream is to make your way to the top of your industry, get married, have kids and a comfortable home to go home to. The way to get to your dream life and your dream home, use to involve several incremental steps that typically started with your “starter home”.
A “starter home” was the first investment that an individual would make. It was when you were done renting and throwing money out the window, and you wanted a safe investment where you could live as well. The advantages of a starter home were clear; you didn’t have to pay rent, and you could take the mortgage tax write off.
Many young people are not only delaying their first home purchase; they aren’t going for starter homes anymore. Wanting more out of what they buy, they are opting to save their money and go to a comfortable home where they can see themselves not only staying for a bit but potentially forever.
Many factors have played into the starter home being not such a widespread concept. The market crash has made many first time buyers pensive about putting themselves into a risky investment. Another reason is that most college graduates aren’t guaranteed a good position with a company anymore, and they come out of school with an abundance of student loans and debt that makes it difficult, if not impossible, for them to obtain a mortgage rates Winnipeg loan.
That is leaving many first-time buyers sitting on the sidelines until they can afford a better home and not have to trade up. Not many are looking for the fixer-upper. Instead, the want the new build. Like a shiny new car, they are wanting “move-in-ready” housing and are willing to wait to afford it.
First home buyers trends
Many who are purchasing their first home are looking for more square footage, which will allow them to grow into the home instead of buying a smaller home and having the mindset that they will just move when they outgrow it. A more “long term” investment, they are delaying their home buying until they can have what they want.
First-time home buyers, for all practical purposes, are skipping the initial home that you outgrow and going straight to the second home, which was typically reserved for when you had a family and needed the extra space. Not a lot of buyers are looking for the smaller homes, if they are, they are ripping them down and building bigger ones or adding on.
A different perspective
Rather than investing in a starter home, it makes more sense for first timers to save up for a bigger down payment and buy a home that they are comfortable in and will do for a longer term. Not wanting to go through the hassles of getting a mortgage, the expense of moving, or moving around, they want to find something that is a more permanent homestead for their future.
In fact, statistics from the Bank of America in 2016 showed that as many as 75% of home buyers who would normally by buying a starter home are opting to go bigger and better. Most had the mentality that they were looking maybe not for their dream home, but one that they could improve upon, redo and renovate, to stay put and one day make it their own.
The one trend that isn’t changing is that 80% of first timers are purchasing single family homes rather than other options such as condos or townhouses. Looking for a more permanent place to settle, they are passing up other options and looking for the white picket fence.
The biggest change with first time home buying is that it isn’t the incremental steps to the dream anymore. It is all about saving the money and waiting with baited breath to find a place to feel settled. Move in ready, or something that has enough room to grow into, are overshadowing the bungalow that you can afford just long enough to get married and move out on your own.
The reality is that many young adults are staying put at home and saving the money to skip the starter home. Perhaps it is that their parent’s home is becoming the new “starter home” out of necessity, and when they finally have the chance to get out, they do, but they chose something much more to their likening.