Apr 08 2009

Should we buy a ‘starter house’ or just ‘one-and-done’?

Over the weekend, we went on a little drive through some neighborhoods in town. We wandered into one eclectic neighborhood that overlooks a park and a lake. Each house was unique in its styling, yet they all belonged together. Some houses were odd; and some looked like places we’d enjoy calling our own.

I knew that they would be out of our near-future price range, but I wasn’t expecting to find that some of these were million-dollar houses. The “cheapest” house in the neighborhood was $500,000. The highest had sold for $1.3M. Oh. Yeah, out of our price range by a lot. A 20 percent down payment on a house like that is only $100,000. Sheesh.
We headed away from the park and ducked into another neighborhood. I knew that these houses were the kind that we would be able to afford in a few years.
Shane was unimpressed. They were small, plain, and lacked personality. I didn’t much like the neighborhood either. 
We came home and logged onto Zillow.com where we were able to find out more details about the houses we saw. It was fun to scout around the site to see houses we liked.
Ideally, we’ll move into a house in two to five years from now. I think that’s how long it will take us to save enough for a down payment and decide where we’ll want to live for awhile (be that Pittsburgh or Indiana or who-knows-where in between).
So, should we aim to buy a house at that time that fits the bill, with the intention of “upgrading” 5 to 10 years later? Or should our first house be one that we could see ourselves in for the life of the mortgage (hopefully 15 years or so)?
 Reasons that support buying one house and staying put:
  • We won’t have to worry about timing the markets for the right time to sell. 
  • Our home customizations — paint, flooring, window treatments, etc. would be more permanent. We wouldn’t have to get things the way we wanted and then change it all to make it sellable. We wouldn’t have to move into a second house and re-customize everything.
  • We won’t have to deal with the hassles and double expense of selling a house, finding a new house and moving.
  • We can feel free to plant roots and really become part of the neighborhood/city.
Reasons why it might be a good idea to buy a “starter house” and then upgrade a few years later:
  • We can build equity in the first house and use that to put a bigger down payment on a second house (assuming, of course, the value of the house doesn’t drop like mad).
  • We can enjoy the perks of living in a house, even if it isn’t our dream house.
I’m leaning toward buying a house that I want to live in for a long time. This might mean we go from seeking a $100 – $150k house to $150k-$250k to get what we want. (Big ranges, I know). If that’s the case, then we’d need to hold off on buying for a bit longer so we can save up an even bigger down payment. 
Maybe that’s reasonable. I mean, why spend gobs of money on a house you don’t like that much? I think I’d rather rent just a bit longer and get a house that I really enjoy living in.
No matter what we decide, it’s important that our house is affordable.
What else can you add to my lists? What did you do?

31 Responses to “Should we buy a ‘starter house’ or just ‘one-and-done’?”

  1. If I were house-hunting right now, I think I would end up getting a smaller home. Why do I need anything more than two bedrooms for just the two of us? I’d feel like we were rattling around.

  2. We’ve never bought ( too busy trying to pay off debt to be able to even THINK about buying a house) but I have a friend who bought a starter home when they got married. it was a small two bedroom. They managed to make about 10K when they sold it to move into their bigger, more than likely permanent home. But that would all depend on the house market at the time of buying and selling.

    I see benefits of both, like you I think I’d go with getting a one and done house. that way we could just remodel and do what we want and not have to worry about doing it again when we out grow that house.

  3. A ‘starter house’ doesn’t have to be one you’re unhappy with! For us, our ‘starter house’ is one that fits our needs perfectly for where we are right now. I LOVE our house. The number of bedrooms and the square footage may start feeling a little tight once we have a couple toddlers running around, but the space is perfect for the two of us now and for our future young family.

    To me, a starter house isn’t one that we’re just ‘making do’ with until our ‘real house’ comes along- it’s one I am content and happy to live fully in now, for this stage of life, even while knowing I’ll someday be in another stage of life where this house won’t be the right place for my family.

    joanna’s last blog post..Am I Crazy?

  4. I should add, Kacie- I do see the logic in buying a ‘forever house’- moving only once and then being able to settle for a lifetime has its appeal. We looked into but decided to buy more conservatively instead. We have good friends our age that moved into their ‘forever house’ last summer- with tons of extra room (to heat and cool, to furnish, and to clean). In 10 years, their house will be perfect for them, and they’ll have already paid the mortgage down significantly!

    joanna’s last blog post..Am I Crazy?

  5. We’ve been in our house 7 years this month. (<9 years on the mortgage. Only had a 15 year!) It is by no means our “forever” home, as I feel it’s to big for the 3 of us! (5 bedrooms, 2 full bath) When we first bought it, it was full. My husband works at an army facility and we rented out 2 of the bedrooms to guys he worked with. It was perfect b/c their rent paid over half the mortgage!

    It seems the size allows us to acquire more stuff. I despise cleaning as it is, so something this size is a big effort. I don’t enjoy dragging laundry up and down 2 stories each time either.

    Our goal: Within 5 years, sell this place and move to the next town over where I hope to be working at the hospital once I finish my nursing program. We hope to either build a new 3-4 bed ranch style or find a fixer upper and renovate.

  6. We bought a two-bedroom starter house and worked furiously to pay down what we owed on it. We were able to get a great deal on some family land, and decided to build a home there three years later.

    I think it’s good to start with a house first and then go on to your final home:

    1) You’ll get experience in being a homeowner – i.e. mortgages, home maintenance, decorating, etc.

    2) You’ll get a better sense of what you want. You’ll figure out what things you like and don’t like about your house and this will help you when you make your final move.

    That said.. .I’ve known folks who’ve done “one and done” and been happy… but I’ve known others who thought they were “one and done” and ended up miserable. Buy the best home you can afford… don’t skimp on bedrooms or garage space. And pay close attention to the neighborboods and schools.

  7. Everyone’s comments are so helpful! Keep ’em coming!

    I do see the wisdom in buying a first house, for reasons Joanna and Christina have pointed out.

    We still have a few years to decide what we’ll do.

    Maybe we’ll try to get a house that we like and that will work for our family for the long haul, and then move somewhere else only if we want to — not necessarily intending to from the get-go.

  8. I think there’s a happy medium between a crappy starter house and a lovely final home.

    Because until you’re in the house you won’t know what the experience will be like until you join the chamber of commerce, visit the school regularly, meet your neighbors and know they will live there the entire time you do, and all the other complete unknowns that go into living in a neighborhood.

    Find someplace you think you’ll love and you’re much more likely to be happy there.

    Of course, that’s just my opinion. We looked at all of THREE houses before picking the one we live in now…so I’m not perfect house hunter :) but I like the schools and I like the fact our neighbors mostly leave us alone. Cause that’s just how I roll.

    jennydecki’s last blog post..Beyond Mom

  9. The best advice we ever got was from a real estate agent. He said to focus more on location than the actual house. You can do so much to change a house- additions, redecorate, landscape etc. BUT, if you hate the location, it doesn’t do any good.

    I had the small starter home in a bad location, and have moved a few times since then. I now have my “hopefully” forever home in the perfect location that I love.

    Owning a home is a great adventure. It sounds like you are preparing and being smart about this next phase of your lives. I wish you the best.

  10. If those are the differences in price ranges (and in my area your one-and-done price range will barely buy a starter home), I’d say go for the one-and-done. You’ll have more time to figure out things like location, school districts, etc and isn’t that big of a difference in price – especially if you find on on the lower end of the price range.

    As others mentioned, if it ends up not being perfect, you can always upgrade/downgrade/cross-grade (is that a word? what would you call similar size but different features?) in 5-10 years like you had initially planned. Based on your money management, it seems like you’ll manage your money the same either way and still be in a good position when the time comes.

  11. We’re probably going to go the “starter house” route, unless something changes (which is always possible). For one, we have no idea what our needs are going to be in 30 years. We don’t know how many kids we’re going to have, what neighborhoods are going to look like (heading up or down?), and where my husband will end up working the majority of his career. Also, knowing how much my tastes have changed in the past 5 years, I think I’d be stressed trying to figure out what I am going to like/want/need for the rest of my life. :-)

    I agree with Joanna – you don’t have to dislike your starter home. :-) I plan to get something I like, anyways. Our goal is to get something we could sell in 5 years but stay in for 10 years if we need.

    Of course, it isn’t bad to continue to keep renting while saving up for a down payment. If you want to hold out for the 30 year house, then of course by all means! It’s up to each individual person. I know that we don’t want to buy the typical cheaply-made starter house that looks like every single house on the block… we want something more unique, but within our price range. Sooo… we’ll see…

    ashley @ twentysixcats’s last blog post..back, and shivering

  12. We bought our house in 2002 right before we got married and intended it as a “starter” house that we’d live in for three to five years before moving “up”. The longer we lived there though the less I wanted to move and then the market crashed and we have no intention of moving anytime soon.

    We aren’t “under” in our house…it’s worth more than we owe. But it’s our home and more than an investment. It’ll be our first baby’s home too. =)

    I say try to aim for a happy medium…a home that you can afford and see yourself living in for many years but one that you could move out of and “up” if you had the opportunity.

    megscole64’s last blog post..1000 Finds – Ellen Morrow Arts

  13. I really agree with Joanna about how your starter home doesn’t have to be one that you’re unhappy with.

    Hubby & I bought our starter home shortly after we were married. It’s a house that I really liked and I still like FOR NOW. It’s just starting to feel alittle cramped now that we have a 3 year old and a 1 year old. Oh and my sister is also living with us.

    We’ve lived here for almost 4 years and we’re looking to move to our hopefully permanent home in the next year or so. I think this is so exciting because we will finally be in a house that I will be willing to spend more on upgrades and such since I know we will be there for awhile. So I can definitely see the value in wanting a permanent house.

    BUT… we’ve learned SO much during the past 4 years. We’ve learned what to look for in houses and what to stay away from. We’ve learned more about neighbors and neighborhoods. We’ve learned about home upkeep and maintenance. We’ve learned what we want in a house’s style and overall layout.

    And for those exact reasons, I am soooo glad we did the starter house thing. I’d hate it if we had spent more money and went for the permanent house first and then decided we weren’t happy there. Of course, you can always move, but I think there’s more of a loss when you’re talking about a bigger, nicer home… especially if you’ve done alot to fix it up, only to realize you don’t like it.

    Sorry for rambling and hope this helps alil.

  14. In 2007 my hubby and I bought a “forever” house. I love the fact that we didnt have to do any “work” and that we had a lot of upgrades so we still havent had to pay for any big extras.

    I figure if we bought a starter home and wanted to fix it up, we would’ve spent upwards of $50,000.

    We have no kids but my mom and her husband both live with us and we feel like we have enough room. But, I must say I get slightly frustrated that now that the housing market fell I could’ve had an extra 1,000 s/f at the same cost that I paid. There isnt anything that can be done about that now.

    Since the market did fall so bad and we purchased right before then, I am so thankful we didnt buy a $275,000 “fixer”.

    I love our house and am glad to not have to worry about fixing it up and what our next one will be like!

  15. Don’t buy a house!!! lol, I’m just kidding. We bought a 1500 square foot house that needed a little bit of work and OMG I am so tired of working on it!! Sometimes I wish we had bought a finished house but I know we would have spent more money. It wouldn’t be so bad if I had help with the renovations. I guess I’d buy a smallish house and go from there. That way you know you can afford the payment and you may be able to stay there forever. I think smaller is better! Less to clean, heat, etc. :)

    Mrs. Money’s last blog post..Tax Time!

  16. Our forever house is only 1700 sq ft and 3 bedrooms and I still wish we would have gone smaller. It was in great shape though inside- very little work/painting to do. We only paid $180k but it is now only worth $176k (sigh)

  17. I think you have to be careful if buying a starter home.

    My brother and sis-in-law bought a starter home a few years ago, and sold it last fall. They weren’t “under”, but they sold at the worst possible time and didn’t get nearly as much for it as they had hoped. That’s the problem with starter homes, I think. If the housing market is bad when you decide to sell (or need to because your family is growing!), you’re stuck.

    I bought my first house when I was single – it was tiny! I sold when I got married in July 2007, which was right at the beginning of the housing bust. One thing I DO have to say for it is that the really inexpensive starter homes were selling better than the mid-price homes – probably because there are so few out there that are so cheap!

    My husband bought a three-bedroom, 2 bath house before I met him. Luckily for both of us, I love this house. It’s big enough for a family and it’s a ranch, so we’ll be able to get around when we’re 90 years old without having to worry about stairs. This place is a keeper!

  18. Umm, I guess all of that was to say, I vote for a once-and-done house!

  19. Have you ever considered getting into your starter home, living there for a few years, and then renting it out to another starter couple or older downsizing couple once you are ready to move into your next home. Then you will have two assets instead of one.

    Steve’s last blog post..Have You Overlooked These 4 Powerful Forms of Leverage?

  20. We purchased our first home, a townhome, 2 years ago, after renting in one of the homes for a year. We love our “little townhome”, as some of our friends liked to call it (rude, right?) It’s 1800 sq ft, even!

    Here in Texas a lot of people go big mainly because it’s so affordable too, comparably. But big isn’t always better. And I’m often turned off by the mcmansions around here.

    We eventually want a bigger home, but really like our starter townhome for now. We plan to either sell or consider renting it out in about 3 or 4 years.

    With a home, I’d say the #1 thing to consider is, “do you love it?”

    PT Money’s last blog post..How to be a Millionaire: As Explained by a 4th Grader

  21. Wait.

    First, this market should tell you something: Being able to sell is never guaranteed.

    Second, that’s a lot of work to rehab a house. And always have other people’s tastes in mind.

    Third, you’ll be getting a house just the way you want it… and then leave it. Sounds exhausting to me.

    I just think it’s a better idea to delay gratification for a bit and then get the exact house you want.

    Abigail’s last blog post..Me & the big black dog

  22. The starter home thing worked for us because we bought when the market was hot about 3 1/2 year ago, but we bought a house that needed a lot of minor cosmetic upgrades – kindof do it yourself type stuff. Think pea green carpet, etc…

    We sold our home last summer – put in on the market in June, sold by August and even with the bad housing market – we sold for $40,000 more than we bought it for. I think the starter home can really pay off if you buy a fixer upper.

    But – what a scary nerve wracking process to sell with a babe in the house – all of the baby gear, trying to keep things tidy – to keep leaving for the showings of the house. Really hard to coordinate and manage. I’m glad we are now settled in the home where we can raise our future growing family!

    The great thing about the starter home is what a lot of people said – you aren’t overwhelmed which a huge payment, lets you see what homeowner process is like. We were able to make extra payments towards our mortgage so when we sold we had a lot of equity.

    For us it made sense to get the starter home because 3 and 1/2 years ago when we bought we had no kids and didn’t need a ton of room and wanted to do the fixer upper thing.

    Since you already have a baby – maybe you want to skip the whole starter home thing since you may need more room. All of these comments offer great advice on the pros and cons – makes it hard to decide what is best to do!

    I’m sure you guys will make the perfect decision! Good luck!

  23. I would go for the “forever” house. We are looking to move in the next 2-3 yrs because we want to be in a better school district and I am dreading the move now that we have a little one (possibly more by then). I wish when we bought our house 8 yrs ago that we had thought more about family and schools. Now that I have a child I have a stronger desire to feel “settled”…not sure if you feel the same way or not.

    I’m sure you guys will make the best decision for you. Good luck! :-)

  24. House prices in your neck of the woods are really, really cheap!

    About 10 years ago, when I was a single parent with just one kid left in the nest I bought the only place I could really afford.

    Brand new, less than 600 sq ft, studio plus den, for just under $100k and put 5% down. I eventually ended up in it with my 2nd husband and our baby. We sold it about 2 years ago in the mid $170’s. At that time it was still one of the least expensive places in the city.

    Since then (after paying out the remainder of the mortgage) we’ve bought a manufactured home for cash in our intended retirement location and have invested money in the house Eldest Daughter and son-in-law bought. It’s a turn of the century house with a bad ’80’s reno on the “cheap” side of town and cost close to $700k (a little under the median home price). We each have our own area of the house and it works for us for now.

    The ultimate plan involves buying land and building on it in our preferred area (about 4 hours away) but we will need our current place there until our “forever” home is complete.

    The idea of starting with your “forever” house is compelling because it can be frustrating to “settle” for less than you want (or need). But, even if that’s the choice you make, be aware that your life may change in unexpected ways in the next decade or so (never mind in the next 50 years!). What is perfect for you now may not be later and it may not end up being the only home you’ll ever own.

  25. I remember when we were looking at the house we are in now back in the fall and my husband said to me “can you see yourself staying here forever” which scared the crap out of me. Mainly because I am a nomad. I think he considers this our forever house. I am still undecided although I love it and so far our neighborhood and our neighbors. It has plenty of space too with a basement and third floor to finish. I guess my point is, even if you dont buy a forever house, buy one that you plan on staying in for a while or one that, if it should turn into a forever house, you will not regret it.

    Dani’s last blog post..Happy Easter from the Cookie Monster

  26. Another possiblity for you…We live in the suburbs of Pgh and bought a 2Bed 1 1/2 bath for 55,000 in 1998. We’re paying off the mortgage this month. We’re going to put that payment amount (more than P&I obviously if we paid it off in just over 10 years) into savings for a few years and between savings and home equity we should be able to purchase a $200,000 home with cash or a very small mortage. We were about your age when we bought this house (I was 25).

  27. My wife and I bought a house that was at the top of our budget, but we were still able to afford it. The bonus was that it was in a nice location with a lot perfect for raising kids, and had enough bedrooms for the size family we were planning. Now, 6 years later, our incomes have grown and we are living comfortably in the house and able to save a good amount every month. I am happy we did this because we don’t need to think about moving right now as we are having children, and we get to continue living in the same place where we are making memories and doing little things like planting a tree when we got married, building a garden, etc.
    I’d recommend to go for the house where you can stay put, since every time you sell you’ll be paying 5% in realtor commission fees if you need professional help to sell it, pay closing costs with every move, and I dont see houses appreciating at a high rate anymore making it hard to justify all those “transaction” fees.

  28. I am having a similar debate, but my timeline is to buy sooner than you. Now that we have a baby, it is time to stop renting. I’ve looked at several starter type homes, and one thing I noticed is that a lot of them have one children’s room for a child who is obviously a toddler, and usually the family is just a bit older than us. If they are moving because they are already outgrowing the house, then surely we’ll be in the same boat in a few years. Therefore, I’m leaning towards the forever home.

  29. At first, this blog seemed incredibly useful. However, I find it hard to use your blog as a useful tool as it leaves out information about the most important factor in balancing one’s budget: income. We can see how much you spend per month, but we can’t see how much you earn, so there’s no context. Would you consider providing that information for readers, in order to make it a more useful tool (or maybe it’s here but I’m just missing it).

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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