The American dream – buy a little starter home to establish roots and then a few years later sell the home and buy a larger one for your growing family. This method has been used and past down for generations of Americans. However, the starter home is dead and this technique will no longer work.
American homes have always increased in value until the real estate crash which began in 2007 and has yet to let up. When the price of homes is decreasing month after month and year after year, buyers either cannot or will not buy and homes remain in the market for months or years.
Some buyers are stuck in homes that they themselves cannot sell and therefore they cannot buy a new one. Other buyers wish to remain in the sidelines because they are apprehensive to buy a home that will be worth less in the future.
A young couple starting out is far better off renting a decent place for 3-5 years and saving all they can for a larger house – one that they plan on being in for 10 years or more. Skipping the starter home will allow them to preserve the equity they would have lost in value of that first home. Also, this method allows the couple avoid the risks and headaches of not being able to sell the home when they were ready to move up.
An alternative method for avoiding the starter home misery is to learn to be happy living in close quarters and curb your expectations for the size of home you need. Downsizing isn’t always a dirty word.
Americans have been sprawling and building bigger and newer homes for a large part of the 20th century. The sprawl accelerated in the 1950’s with the U.S. investment in the American highway system. The highways, a nod to the American commitment to the automakers, have arguably done more harm than good to the American.
Changing the American opinion in needs and wants may take generations to accomplish. However, as more and more people get stuck in their so called “starter homes,” the American is facing a dilemma in the future. Be grateful for the small home you have and make the best out of it, or accept that our “starter home” step may actually be renting an apartment and make the best of that. Either way, the American starter home is dead.