Should You Buy a Starter Home or Wait for Your Forever Home?

Is it better to buy a starter home now or wait until you can afford the home you really want?

It’s a question many buyers ask themselves.

Maybe you’re currently renting and wondering if it’s time to get into the market. Maybe you’ve saved enough for a down payment, but the homes you can comfortably afford aren’t quite your “dream home.” Or perhaps you’re thinking about waiting a few more years so you can buy something you’ll stay in for a long time.

There isn’t one right answer.

The better choice depends on your finances, lifestyle, timeline and what you realistically expect your housing needs to look like over the next several years.

Here’s how to think about the decision.

What Is a Starter Home?

A starter home is generally a property that meets your current needs without necessarily being your forever home.

It might be:

• A smaller detached home
• A townhouse
• A condo
• A home with fewer bedrooms or less living space
• A property that needs some updating
• A home in a neighbourhood you can afford today

The idea isn't necessarily that you will only live there for a short period of time. A starter home can become an important stepping stone toward your next home.

And sometimes, what starts as a “starter home” ends up being the home you stay in for much longer than expected.

Why Buying a Starter Home Can Make Sense

1. You Start Building Equity

When you rent, your monthly housing payment provides you with a place to live but you aren't building ownership in the property.
When you purchase a home, a portion of your mortgage payment goes toward reducing your mortgage balance.
Over time, that can help build equity.
That equity may eventually give you more options when you're ready to move, whether you use it toward your next down payment or other costs associated with purchasing another home.

2. You May Get Into the Market Sooner

Waiting for the “perfect” home can sometimes mean waiting years.

During that time, your savings may grow but so can home prices, depending on market conditions.

Buying a home you can comfortably afford today allows you to become a homeowner without necessarily waiting until you can afford your ideal property.

Of course, buying a home comes with transaction costs and other expenses, so purchasing only makes sense if you're financially and personally ready.

3. You May Discover What You Actually Want

It's easy to create a dream-home wish list before you've owned a home.

You might think you need a huge backyard, a formal dining room, three bathrooms and a finished basement.

Then you buy a home and discover that what matters most to you is actually a great kitchen, a quiet street and a short commute.

Living in a starter home can teach you a lot about your preferences.

But There Are Downsides to Buying a Starter Home

Buying simply because you feel like you “should” get into the market isn't necessarily the right decision either.

You May Outgrow It

If you're planning to start or grow your family soon, a smaller home may not work for very long.

Think about what your life could look like in three to five years—not just what you need today.

Moving Costs Money

Buying and selling a home involves costs.

There may be legal fees, moving expenses, land transfer tax, mortgage-related costs, repairs and other expenses to consider.

If you buy a property and move again shortly afterward, those costs can make the decision less attractive.

You May Compromise Too Much

There is a difference between buying a home that isn't perfect and buying a home that doesn't work for you.

If you're constantly thinking about the things the house lacks or already know you'll be unhappy there it may be worth waiting and saving for something that better fits your needs.

What About Waiting for Your Forever Home?

A forever home doesn't necessarily mean a huge luxury property.

It simply means a home you expect to stay in for a long time.

For some buyers, that might mean finding a property with enough bedrooms for a growing family. For others, it could mean a bungalow where they can comfortably age in place.

Waiting can make sense if:

• You have a clear idea of what you need
• Your current housing situation is comfortable
• You are able to save consistently
• Your income and finances are likely to improve
• You don't want the costs associated with moving again
• You can realistically afford the type of home you're waiting for

The key word is realistically.

It is important to distinguish between waiting because you have a clear financial plan and waiting because you're hoping the perfect home will eventually become affordable without changing anything else.

The Question You Should Really Ask

Instead of asking:

“Should I buy a starter home or my forever home?”

Try asking:

“What home makes the most sense for my life and finances right now?”

That changes the conversation.

Your first home doesn't have to be your dream home.

It also doesn't have to be a temporary home.

It simply needs to be a home that works for you.

A Simple Way to Compare Your Options

Before making a decision, consider these five questions:

1. How long do I expect to stay?

If you think you'll move within a couple of years, buying may not make sense depending on your circumstances and the costs involved.

If you expect to stay for five years or longer, purchasing may be worth exploring.

2. What can I comfortably afford?

Don't base your budget solely on what a lender says you can borrow.

Consider your mortgage, property taxes, utilities, insurance, maintenance, potential condo fees and everyday living expenses.

A home should fit into your life not consume it.

3. What will I need in the next 3–5 years?

Think beyond today.

Could your household grow? Will your work situation change? Do you expect to need a home office? Are you likely to want a larger yard?

Your future plans can help determine whether a starter home will actually work.

4. What am I willing to compromise on?

Maybe you're okay with a smaller kitchen but need a good backyard.

Maybe you don't care about having a finished basement but want to be close to work.

Knowing your must-haves versus nice-to-haves can make your search much easier.

5. What happens if I wait?

Consider what waiting actually looks like.

How much more could you save?

How will your income change?

What happens to your current rent?

What if the homes you're interested in become more expensive or less expensive?

Nobody can predict exactly what the housing market will do, so your decision should ultimately be based on what you can control: your budget, savings, employment, debt and personal circumstances.

There Isn't a One-Size-Fits-All Answer

For one buyer, purchasing a modest townhouse in Brantford or Paris may be the perfect first step.

For another, waiting and saving for a larger home in Brant County may make more sense.

And for someone else, the best option may be to continue renting while they improve their financial position.

The goal isn't simply to buy a home.

The goal is to make a housing decision that makes sense for you.

Thinking About Buying Your First Home?

If you're trying to decide whether to buy now, wait, or look for something that falls somewhere in between, it can help to talk through your options before you start house hunting.

We can help you look at what's available in Brantford, Paris, Brant County and surrounding communities, discuss what different types of properties may fit your budget and help you understand what your options look like in the current market.

Sometimes the right answer is a starter home.

Sometimes it's worth waiting.

And sometimes, the home you didn't think was your “forever home” turns out to be exactly what you needed.

Ready to start the conversation?

Call/text us directly at 226-400-6458.

Jody Tysoski, Broker
Paula & Lexi Tysoski, Sales Representatives
REAL Broker Ontario Ltd.