In the past, first-time buyers were looking for a “starter home,” a smaller, more affordable property to hold onto until they could eventually buy their dream home that was more suited to them. We entered the housing market with the idea that their family.
But does the concept of a “starter home” still exist? Despite the rising interest rates, rising home prices, and inventory shortages plaguing the current market, they are happening, and the situation is not the same as it once was.
They weren't purchased as starter homes, but that doesn't mean they won't become starter homes
“I don't think buyers are buying homes with the intention of being 'temporary,' just trying it out for a short period of time,” said Susie Minken, a real estate agent with Compass in Short Hills. Ta. . “However, if a buyer is not looking for a starter home, it may imply that the buyer may not become a ‘step-up’ buyer in the future.”
Minken said it's become rare for buyers to come to her, especially to buy a starter home. Instead, the buyer is simply looking for a home, without specific terms like “starter,” or clearly stating that they are looking for a “forever home.”
She said the concept of a starter home doesn't really exist in today's homebuyers' vocabulary like it used to, but that doesn't mean it won't become a starter home in the future.
“There are many buyers who are actually 'up' buyers. These 'up' buyers are actually 'accidental up' buyers, perhaps because the home they bought years ago is the starting point. “I think it's likely that it wasn't planned to be a spot,” Minken said. “Looking back, these buyers bought a starter home and are now looking to ‘step up’.”
Similarly, John Barone, a real estate agent with Coldwell Banker Realty in Ridgewood, said it has become difficult for today's homebuyers to plan for the future. Having to move closer to family, relocation, unexpected family changes, and other circumstances make it difficult for people to know whether they will stay in the same place for the rest of their lives.
“Things happen in life, right? Let's say you and your husband buy a two-bedroom house. But before you know it, your family has grown. You never know what will happen in the future. So, the basics… “We have to deal with it one step at a time,” he said. “I'd like to say it's a long-term purchase, but I don't know.”
Or if a buyer is looking for a starter home, it may not necessarily be a single-family home.
But if a buyer is specifically looking for what could be described as a “starter home,” it doesn't necessarily have to be a small single-family home. Instead, townhouses, condos and apartments are becoming the new starter homes, Barone said.
“Right now, the first purchase is typically either an apartment, a condo or a townhouse,” he said. “There aren’t that many buyers buying single-family homes for the first time.”
Home starts as a starter home but must transition to a forever home
As interest rates remain high and home prices rise, people who bought what they thought were starter homes years ago must transition that property into their forever home.
“Factors such as mortgage rates, relatively low housing stock, and rising home prices can influence homeowners' decisions to remain in their homes longer,” Minken said. “This, of course, contributes to the ‘housing supply gridlock’ we are experiencing today.”
Because of this, Barone said he always encourages buyers to consider properties that allow them to expand in the future. This will give you some breathing room in the event that unpredictable market fluctuations prevent you from purchasing a larger home in the future.
This can also be the case if a buyer initially buys a smaller home but ends up falling in love with the location, Minken said. This adds flexibility to your property so you don't have to think of it as a “starter” or “forever” home.
“If you're likely to stay in your home for a long time, and it's small, you'll probably want to look for a home with a decent-sized lot that you can expand on if needed,” says Barone. Ta. “Also, if you have a full basement that's unfinished, you just have more opportunities to finish it and create more living space outside of your home.”
After all, buying a home isn't as easy as it used to be. So both Minken and Barone said all they can do is take the process one step at a time.
“It's a very difficult time to buy a home,” Barone said. “This market requires you to be very creative and have patience.”
Maddie McGay is a real estate reporter for NorthJersey.com and The Record, covering everything that's worth celebrating about living in North Jersey.find her girlfriend Instagram @maddiemcgay, upon X @maddiemcgayyand sign her up north jersey living Newsletter. Do you have any tips, trends, or great homes she should know about? Email her at MMcGay@Gannet.com.
