Tips for Choosing Your Perfect Starter Home

The journey to homeownership often begins with a starter home. It’s a practical first step on the property ladder that can help you build equity while getting a feel for what homeownership really means.

While starter home values have increased by 54.1 percent from 2019 to 2024, there are still opportunities for first-time buyers. Approaching the process with knowledge and preparation is the way to go. Finding the right starter home involves balancing your immediate needs and future goals. It’s about making smart decisions now that will benefit you down the road.

What is a Starter Home?

A starter home is exactly what it sounds like—your entry point into homeownership. These properties are typically more modest in size and price than the average home on the market. This can make them accessible to first-time buyers who are just beginning to build equity.

The typical starter home for sale in the United States is valued at around $196,611 nationwide as of July 2024. These properties generally feature one to two bedrooms with a single bathroom and offer approximately 750-1,250 square feet of living space. While this might sound small compared to the average American home, it’s precisely this compact size that makes these properties more affordable for new homeowners.

What defines a starter home isn’t just its size, though. Most people purchase starter homes with the intention of staying for a relatively short period before moving on. This is typically to something larger as their needs change and their financial situation improves. However, because of higher interest rates, many homeowners are extending their stay in starter homes longer than originally planned.

It’s worth noting that a starter home doesn’t have to be a traditional single-family house. Condos, townhouses, and other types of properties can all serve as starter homes, depending on your location and preferences. The key characteristic is that it is a stepping stone that helps you transition from renting to owning.

Location Considerations

When choosing a starter home, the old real estate mantra “location, location, location” rings true. In fact, where you buy might be even more important than the home itself. You can change almost everything about a property except where it’s situated.

Start by evaluating neighborhoods based on your daily needs. How far is the commute to your workplace? If you spend hours in traffic each day, those extra square feet you got by moving further out might not seem worth it.

Property taxes vary by location, sometimes even between neighboring towns. A seemingly affordable starter home in one area might have surprisingly high tax bills that strain your monthly budget. Research the property tax rates for any area you’re considering, and calculate what that means for your bottom line.

Proximity to amenities like grocery stores, parks, healthcare facilities, and entertainment options will affect your day-to-day quality of life. While a more remote location might offer more house for your money, the convenience of having essentials nearby often proves invaluable for busy first-time homeowners.

Finally, don’t overlook transportation options. Even if you currently drive everywhere, access to public transportation can increase your property’s appeal to future buyers. Plus, having alternatives to driving can save money and provide flexibility as your life circumstances change.

Must-Haves vs. Nice-to-Haves

When shopping for a starter home, one of the most important exercises you can do is distinguishing between your “must-haves” and your “nice-to-haves.” This distinction can make the difference between finding an affordable starter home that meets your needs and getting caught up in a wishlist that puts properties out of your price range.

Start by creating two separate lists. Your must-haves should include non-negotiable elements that you absolutely cannot live without. These typically include structural and functional aspects of the home rather than aesthetic touches. For example, having enough bedrooms to accommodate your family is a must-have, while a farmhouse sink in the kitchen is likely a nice-to-have.

When it comes to nice-to-haves, think about features that would be wonderful but that you could either live without or add later. These might include:

• Updated kitchen appliances
• Specific flooring materials
• A finished basement
• Particular landscaping features
• A fireplace
• Built-in storage solutions

Remember that you can gradually transform your starter home over time. Many first-time homeowners improve their properties incrementally. This can make the process more financially manageable while putting a personal stamp on the space.

Planning for the Future

When purchasing a starter home, you need to think beyond your current circumstances and consider how your needs might evolve in the coming years. This forward-thinking approach will help you make a more strategic investment. It can also potentially save you from outgrowing your home too quickly.

First, be honest about your timeline. How long do you realistically plan to stay in this starter home? While the traditional expectation was that first-time buyers would remain in their starter homes for 3-7 years before upgrading, today’s market conditions are causing many homeowners to extend their stay. Consider whether the home you’re eyeing will accommodate your life for that duration.

Life changes can also impact your housing needs. Are you planning to expand your family? Switch careers? Work remotely? These potential shifts should factor into your decision-making process. A one-bedroom condo might seem perfect for your current single lifestyle, but could feel cramped if you add a partner or child to the mix within a few years.

Evaluate the home’s potential for adaptation. Can rooms serve multiple purposes as your needs change? Is there space that could be converted or finished later to add square footage? A basement that could become a home office or a spare bedroom that could transform into a nursery offers valuable flexibility as your life evolves.

Finally, maintain perspective on what a starter home is meant to be: a beginning, not an endpoint. It doesn’t need to be perfect or fulfill every dream on your wishlist. It simply needs to provide a stable foundation from which you can build your future.

Contact your local REMAX agent for support and expertise in finding your perfect starter home.