It may seem far-fetched, but many first time home buyers are now purchasing larger homes than the traditional “new starter home”.
Do you remember your first home?
Many were tiny fixer uppers or older homes in need of updating.
Recent stats have shown that more first time home buyers in their 20’s without children are bypassing the “starter” home and purchasing a much larger home than they really need.
Why? With today’s interest rates hovering in the record low levels and an inventory of well-priced homes, those with a good income prefer to buy a larger home as possibly their “forever” home with all that they desire.
Buying a larger home will prevent these first time home buyers from having to do the more traditional “move up” process that most of us remember our parents and/or ourselves doing.
As their family grows they will already have the extra space and won’t have to move.
Another factor is that today’s first time home buyers have come to realize that it could take years before their home will gain enough equity to allow them to move up to a costlier home.
Walter Maloney, spokesman for the National Association of Realtors, recently stated that in 2010 the typical buyer remained in their home about 10 year. Currently, the new estimate is now 15 years.
More first time home buyers are starting to think BIG when they think about their next home.
How Big?
In 2011 only 6% of people desired a home larger than 3200 SF. In 2012 that figured jumped to 11%.
In 2011 17% of Americans felt their ideal home size was more than 2600 SF and by 2012 that had increased to 27%.
Master bathrooms, walk in closets, and a gourmet kitchen were among the top items renters mentioned they would love to have in a home.
The reality is this:
- 26% of actual first time home buyers had a master bathroom
- 35% had walk-in closets
- 9% had a gourmet kitchen
It is understandable that most first time home buyers do not have the finances to purchase their dream home, which is why it is so important that they sit down and figure out exactly what they can afford.
Also, don’t be afraid to ask your Lender some questions.
No one wants to be “house poor” and find they are so strapped to the mortgage that they can’t enjoy their home.
I have told many of my first time home buyers to really look at the monthly budget and to make sure emergency funds are built-in to that budget.
I often joke with them that I want to be able to sleep at night and I won’t if I am worried about your mortgage payment! Why? Because I know at some point they will somehow, in their financial frustration, begin to believe I talked them into buying above their comfort level. Then they will be upset with me.
They always laugh at me but trust me, I am never comfortable if one of my buyers is stretching it too much.
Buying a larger home is great! And if you can do that as a first time home buyer, that’s great too!
Just make sure that you know what you are getting into and have thoroughly looked through your finances.