Starter Home – What Is It?

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A starter home is a small, inexpensive home suitable for first-time home buyers. The home may be in move-in condition or it may need some tender loving care to make it livable. Either way, these are generally single-family homes that are considered good starting point for families or individuals  purchasing their first home. Find out what price points the starter homes in your region are demanding by looking through your local Sunday paper and look for ads that say things like “needs TLC” or “good starter home.” You can also search the internet or consult with a local real estate professional. The concept of the starter home is simple; you buy a small, inexpensive home (typically when you’re still single or recently married) with the intent of selling it within a few years. By that time, your income will have grown allowing you to purchase a larger home or you will need more space for a growing family. The idea works well for some who improve the home and within a few years end up making money on the sale and “moving up.” Not so well for others who outgrow the home too soon and end up losing money if the property hasn’t appreciated.

First-time home buyers are less likely to buy a detached single-family home than repeat buyers. Instead they more frequently purchase lower-cost starter homes such as town houses, row houses or condos. A greater proportion of new home buyers than buyers of previously owned homes bought detached single-family homes. Don’t expect a lot of bells and whistles with starter homes, they are often a good match for someone who is either handy with repairs and upgrades or willing to shell out a few more dollars to have someone else do the work. Starter homes are generally prices anywhere from $60,000 to $200,000 and up depending on where you are located in the country.

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