Are "Starter Homes" Bad Ideas?

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Banana_IHB

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I read a comment on the OCRegister Blog that made me think about the concept of a starter home. I just kind of accepted that this was the way to go: buy your first house knowing that you will eventually grow out of it with kids or other reasons and then move to a better home. But, in doing this you pay real estate broker fees and moving costs, etc. Not to mention stepping up your tax base. I am interested in hearing if others find the concept of buying homes you know you won't live in for more than 5-7 years a little off (and perhaps a function of smart marketing by realtors). Has anyone held off buying until they found a house they could imagine living in for 30 years? What are your opinions on this?
 
I dont think people necessarily *want* to grow out of their house... it's just that most people starting out, cant afford the three or four bedroom house.

And even if they could... if its just a couple, maybe they don't like the idea of buying a big ol' house when they're really only gonna utilize half of it. Like why buy a minivan when you first get married.... sure, you'll have kids eventually, but why buy more space NOW when you don't need it for another 5-7 years.
 
Although we can pretty much afford a nice 'starter' condo in south OC even at its prime pricing, my SO and I have decided that there was no way we were able to live in an attached housing for more than a couple years. In addition, I don’t want to move just because I accidentally (or purposely) have kids! For these reasons, we are saving up and holding off for a brand new not-so-starter and arguably bit over-priced home in Irvine.

If I buy the place I've set my eyes on right now in Portola Springs, I would have no problem living there for the next 15-20 years. Of course, I admit it is easier said than done but if you could work and sacrifice a bit more now to have a nicer place in a few years, why not do so?

Everyone’s situation is different and I’m sure there are those who would better benefit from a cheaper starter home (cost, not quality). Since I am able to still save money each month now and can deal with my current non-permanent housing for another few years, I’d rather just save up for a bigger place rather than settle for something I know won’t do in 5-7 years.

But like I said and as mk9 stated, sometimes people just can't afford a larger place and have to settle for a smaller starter home. There is absolutely nothing wrong with it. In the long run, the fees you pay from buying/selling shouldn't make too much a dent in your wallet.
 
raymond,

Do you know what my take is? Speaking from my own experience? I would be so much better off had I took the plunge. Why did I not? I did not listen to my husband to buy the dream home early on and now we ended up spending so much more. I say go for it. I bet if I am your "virtual" agent (aka - working for free), I can figure out a way for you. this is my specialty. Would you like to take the challenge?
 
nirvinerealtor,

Do you mean figure out a way to get me into my dream home? The help wouldn't hurt!

I think I am already on track to buying that home soon though. It's just a matter of savings and waiting on the market. If prices remain the same the next two years and interest rates do not go up, then I would still be able to buy my not-so-starter home.

Only two things would ruin my plans right now (minus losing my job); dramatic rise in interest rates or near double digit appreciation of homes.
 
Won't it take you longer to buy the "real" home if you buy a "starter" home first? That is if investing your money gives you a better return than home appreciation.
 
I did what you call a starter home and know others that have done the same thing that now own places overlooking the ocean in NP Beach. The main thing is get in the game at some point.

Planning on living in a house for 5-7 is realistic. I stayed in my first for 9 years. To many people don't buy because they can't find that perfect home, so they rent. As a landlord I should not complain ... just don'tget into the trap.
 
nirvinerealtor,

Go ahead and ask the questions here if you want. I don't mind providing some information regarding my plan and we'll resort to whispering if I feel the info is too private.

halfnote19 ,

Yes, in most cases, it will take you longer to get a better home if you decide to skip on a starter. Personally, it is costing me at least an extra 2 years of ownership. But when house prices drop, I will be laughing my way to the bank. If they don't drop, then I'm buying anyways... can't wait forever.

BUT, if most of your monthly income is going into rent and you already have a chunk saved up for a down payment, your best bet should be to buy now (not NOW now... you know what I mean). Like srh563 said, you gotta get into a place eventually so set a goal (i.e. down payment or time frame) and pull the trigger when the time comes!
 
raymond,

First I need to qualify you as a buyer. You are qualified as a potential buyer if your answer is yes to all 3. Let's see how you answer and we go from there.

1. Are you ready to buy now? Why?

2. Are you willing to buy now.? Why?

3. Are you able to buy now? Why?
 
NIR - how does answering any of those questions help you in evaluating raymond's situation? I imagine you would need to understand his financial situation like gross income, taxes he currently pays, etc to see if he can truly buy his dream home now.
 
rkp,

That is correct. That would be part of question #3 (Can you move into the new house yet? can you afflord the payment?).

Buying a home is an extremely stressful process. You need to clear all the obstacles before you can potentially become a homeowner.
 
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