Purchasing a starter home is not as simple as it once was. First-time home buyers are flooding the market, and the supply of moderately priced homes is dwindling by the day. With the sluggish economy and tougher lending standards, many people are priced out of the real estate market.
There are, however, other solutions if your finances are limited or you simply do not want to overextend yourself. While you make your decision, consider several financial alternatives.
A Tough Market for Buyers
Buying your first home seems to be more challenging than ever before. One of the largest hurdles for first-time homebuyers is financing their purchase. High rent makes it hard to save, wages are low, and the strict demands of mortgage providers can make it seem like you’ll never buy your property.
However, there are ways to get onto the property ladder that don’t involve hefty deposits. As the housing crunch continues, potential buyers may want to consider unorthodox options. You’ll still need some cash behind you-but you could own your own home much faster with one of these options.
Location Makes a Difference
“Location is key” is a very well-known real estate cliché, yet it holds. When looking for a home, one of the most important elements to consider is location. The value, affordability, and quality of life are all determined by one’s location. The location of your home in a city or town will surely influence how much you spend on it.
Because land is a limited resource, cities like New York and San Francisco which are highly developed and don’t have many expansion opportunities tend to have higher costs than cities that have a lot of space to grow. Some of these towns feature a high number of vacant homes and areas that have fallen into ruin. It is vital to note that geography influences whether certain housing options will work better than others.
What Are Some Starter Home Alternatives?
When most first-time homebuyers envision their starting house, they think “small.” Going with less square footage is one approach to saving money, but it is not the only way. Other property styles provide excellent value but are not as popular as the white-picket-fenced rambler with two bedrooms and 900 square feet with a yard. As a result, you may have less competition while pursuing certain assets.
Some popular alternatives include:
1. Condominiums
Condominiums make excellent starter houses. They are not any smaller than many freestanding homes on the market. The fact that it is an “attached residence” reduces the price.
Condominiums are often less expensive in most places. The Northeast is an outlier, with New York condo costs pushing the average above single-family home prices. However, outside of that city, a condo will most certainly be more affordable. However, keep in mind that homeowners association (HOA) dues might raise monthly costs above what it would cost to acquire a single-family house.
2. Zero-Lot-Line homes
Many first-time home purchasers are unfamiliar with zero-lot-line homes. They are not very common, but they can be a nice buy if you can find one. A house with a zero lot line shares a wall with another dwelling. These are also referred to as row dwellings or townhomes. Their name derives from the lack of a real lot line between the homes.
The lot line is technically the precise center of the shared wall. Prices are lower than in a condominium because of the connecting wall. However, unlike a condominium, there are no or greatly reduced HOA dues.
The shared wall does not take away from the delight of owning. You can still rebuild, paint the interior, and personalize it. Furthermore, there are fewer shared walls than in condominiums, reducing the likelihood of noisy neighbors. Zero-lot-line residences appreciate similarly to single-family homes and can be sold more readily due to fewer lender limitations on these properties compared to condos.
3. Homes in Need of Renovation
If you’re like many other first-time homeowners, you want a “turn-key” home—one you can start living in right away without any required fixes. Not everyone is up to the task of a fixer-upper. But in the current market, competition is fierce for top-quality homes.
You can find a home in need of some repairs much quicker than those deemed ready to live in.
Especially attractive are homes on which no one can get standard financing. Lenders require the home to meet certain livability and safety standards before they will lend on it. Most buyers will pass on those properties. Fortunately, there are loan programs you can utilize to buy the home and renovate it.
4. Tiny home
A tiny house is exactly what you’d expect it to be. Everything you need to live is crammed into a compact space, usually less than 400 square feet. Some folks have built their own tiny house for under $10,000. A tiny home can cost up to $150,000 with some luxury and customization. The typical price, however, is between $30,000 and $40,000.
A tiny house can be brand new or a repurposed space that previously had another use. People adore tiny houses because they provide a unique way of life. When you live in a 400-square-foot space, there’s no room for extravagance.
However, it is a popular choice for those who value zero waste, a low carbon footprint, or a minimalist lifestyle. Even though small houses are tiny, they may still cost tens—or even hundreds—of thousands of dollars, so it’s important to secure your investment with solid tiny house insurance coverage.
5. Shipping Container Homes
Shipping container homes are inexpensive and simple to install. They can also appear and feel more “homey” than you might believe. Nothing says you can’t cover the house’s metal skeleton, both inside and out. Perhaps most importantly, you can combine numerous containers to create a home of whatever shape or size you like.
House Sitting and Other Nomadic Options: Airbnb & Beyond
Nobody says you have to buy a house, even if it’s a nomadic one. Why not try living in other people’s houses? Depending on the location, it is possible to live quite cheaply in other people’s houses by using Airbnb or other short-term listing services. Long-term stay hotels are also an option, and in some countries, they are inexpensive.
They are, however, not free. Do you want to stay for free in other people’s homes? Offer to be a caretaker and housesit. You might even get paid for offering your time.
Make a Smart Investment
For most homebuyers, the most important aspects of deciding on a location are affordability and getting the most bang for their buck. Although purchasing a home is a personal choice, it is also a big financial investment. As a result, it is critical to explore each neighborhood to better grasp property values and market trends.
If you’re a first-time house buyer, you’ll quickly realize how easily you may become overwhelmed by all of the options, costs, and lingo. When you begin learning about the real estate industry, you’ll notice that many people envision a single-family home when they hear the phrase “house for sale.” However, it is merely one of the many housing possibilities available.
