Remember the starter home: that first house young couples dreamed of, saved for and finally purchased? It represented their first – but likely not their last – entry into the real estate market. Modest in terms of size, price and furnishings, the starter home was seen as a stepping stone on the way to bigger and better things. A couple could build up some equity, accumulate some “good pieces,” and become accustomed to the responsibilities of home ownership in a way that was seen as an “easing in” to the market. Then, as children came along and the family needed more room, the starter home became that stepping stone. It was traded up for increased square footage, more bedrooms and bathrooms, maybe even a bigger yard – something more suitable to the needs of a growing family.
Is Yesterday’s Starter Home Making a Comeback?
In recent years, when cheap financing and low or no down payments ruled, the starter home became just so very yesterday. For many North Americans – especially first-time buyers – the only kind of home worth owning was big and beautiful with all the fancy upgrades and probably a three-car garage.
Many first-time buyers had expectations of starting their home ownership journey in the same sorts of houses they’d grown up in, with family rooms and bonus rooms, walk-in closets and cathedral ceilings. And given the easy money and lack of credit restrictions, they saw no reason they couldn’t have them.
How times have changed. The U.S. housing meltdown and global economic uncertainty created an environment where starter homes are beginning to make a comeback. According to recent media reports, builders have begun testing a new line of smaller, starter-type homes. The target demographic: 20-somethings who either prefer to or must rent.
Will it work? Is our society ready to abandon the dream home for a stepping stone? Only time will tell.
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