In the old days, young couples looked for a modest detached house in a family-friendly neighborhood as the first step to their dream home. Starter homes, as they were called, were affordable, although in many cases they needed some tender loving care. But they were home to millions of families over the years.
Today, many people, notably millennials and other first-time buyers, might be interested in a starter home. If they could find one. This can be a real challenge, particularly in growth states like California, Florida, and Texas, and in urban centers such as New York, San Francisco, and Dallas, where job gains have outstripped residential inventory growth.
A variety of factors have exacerbated the supply-demand imbalance. With interest rates at historic lows, investors have bought up smaller homes and turned them into rentals; flippers have remodeled and increased the value of older homes; and owner occupants have enlarged them to make them more appealing to upmarket buyers. In addition, many developers are just not motivated to build starter homes. So how do you go about finding a starter home? Here are some tips:
- Seek out older homes, which typically cost less than new builds.
- Look for foreclosed properties or short sales in your desired area.
- Be ready to act immediately when a well-placed starter home comes on the market.
Above all, be open-minded about the location, size, and condition of the home. Keep in mind that a starter home is usually just that-a starter on your way to your forever home.
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