Real Estate News

What makes a 'starter home' in today's economy?

Published: 12 May 2017

The future of the housing market will probably always depend on fresh new buyers searching for a residence. Right now, the much-criticized millennial generation is in the spotlight, as it ages into a more ideal demographic for purchasing real estate. To get their first taste of ownership, new buyers can search for "starter homes" that are affordable and modest, yet still large enough to fit an owner's specifications.

According to The Wall Street Journal, starter homes could be a major shift in real estate. The amount of Fannie Mae mortgage shares attributed to buyers purchasing their first home has increased in recent years, and the Journal said that executives see a new expectation for high quality homes when they buy for their first time.

The logic seems to be that this millennial buying group has waited longer and therefore wants to get more out of the first home they actually buy. The Journal did point out that rising mortgage rates could still be an issue, especially for owners with debt issues.

However, there are some who dispute the very idea of a starter home. Writing for Forbes, contributor Neale Godfrey pointed out that a home you only expect to own for a set number of years might be yours for significantly longer. She also mentioned the role additional fees, including maintenance, can add on to the initial cost. Seen through that lens, it might be better to simply wait and save up for a home intended to last.

Ultimately, Godfrey argued that the decision will change with each person, and that could be the the biggest takeaway. Depending on how much capital they have and what their expectations are, new buyers might redefine what a "starter home" really is in 2017.