You are ready to buy your first home. Congratulations! Although you haven’t found it yet, in your mind it’s perfect! Open concept, granite countertops, a walk-in closet…the works! Before you start to envision what your first home will look like, take a step back. You are buying your very first home. It may be great, but chances are it won’t be your dream home. You may be one or two more home purchases and moves away from your ‘dream home’. The key is to find the right first home that will fit your needs and to find the right balance of a home that comes as close to your dream home as possible, but stays within your budget.
Starter Home: the term ‘starter home’ exists for a reason. At the height of the housing market craziness, and right before the bubble burst, many first time home buyers make the decision to skip the starter home and go for their dream home. You have to accept that your first home is probably not going to be the one you live in for the rest of your life. That’s okay! And the thought of what lies ahead should be exciting! When you think about the fact that your future holds salary increases and savings plans, the opportunity to move up becomes more real. When you’re ready to live in a larger, dreamier home, this first home can provide you with the funds for that purchase.
House to Condo: yes, you are going to narrow down your choices, but as you begin to look at places to live, keep an open mind. You may be thinking about a house, but there might be a great condo with a great balcony, stunning view, and great amenities that could be just as dreamy. For your budget, a condo or even townhouse might get you closer to your dreams than a single-family home.
Old vs. New Construction: twice as many people prefer new homes over existing ones. ‘New’ means new construction, or homes purchased in pre-construction while ‘existing’ means a house someone else has lived in. Many of these ‘existing’ homes are ones that were built anywhere from the 1920s-1970s. For the same price, many potential homeowners rather buy a newly-built home over an existing home. However, most new construction homes could cost you up to 20% more than a comparable older house. Buying an older home could add up to big savings and allow you to get a bigger piece of your ‘dream’ rather than a brand new one.
The Fixer: it might be a good option to buy a home that you can add value to, rather than paying the bigger price tag to someone else who had the word done for you. Offsetting a big price tag with equity is a smart move. In addition, you can get more for your dollar, and have the option to fix up and improve it as time goes on and as you have the available cash to fund the renovations. Plus, all that original older architectural detail that comes with many fixer-uppers is a dream in the making.
Balancing Dreams & Location: you now are pretty clear about how much you can afford and the price range you need to consider. Now comes the tug-of-war where you want to live and what you can actually afford. We all want to live in the most up and coming part of town. But your budget may not support that option. Be prepared for this ‘price vs. location’ battle. You can live in a slightly less desirable neighbourhood, but you can’t live in a house you can’t afford.
Transitional Neighborhood: buying in a transitional neighborhood for your first house allows you to get into the market relatively cheaply and build some equity. It may not be your dream neighbourhood, or the seaside beach community you want to retire to, but clearly, it’s not going to be your ultimate dream home. If you can identify an area on the upswing, you have secured yourself lots of potential wealth building. The neighborhood may be a little rough around the edges now, but if you have gauged its transition potential correctly, in three or five years you may be sitting in the middle of a hot new trendy area, where home prices have risen substantially!
Knowing The Must-Haves vs. Should-Haves: what makes something about a house a ‘must-have’ and another element a ‘should-have?’ Well, the must-have is essential in your new home. For example: ‘We now have a newborn baby, so we must have a two-bedroom house.’ However, a should-have is not essential and it may get nixed out of the mix if price becomes an issue. For example: ‘We should have a three-bedroom house. That way we can save one room for guests or for a home office.’ That third bedroom is not a must-have and you could or may have to live without it to get into a house you can afford. Square footage is also a must-have. For a first-time home buyer, 1,600 square feet could be a realistic minimum must-have, whereas 2,300 square feet is a should-have. A nice, clean, functional kitchen is a must-have, but a gourmet kitchen with double ovens and Viking stainless steel appliances is sadly just a should-have. Knowing your dream house must-haves vs. should-haves really helps you prioritize, because on the ultimate hunt for your dream home — compromises are going to have to be made. Happy hunting!
CENTURY 21 Miller Real Estate Ltd.
Brokerage Independently Owned and Operated
#4 Office in Canada
By Production CENTURY 21 Canada 2013
467 Speers Road, Oakville, ON L6K 3S4