re: What factors make a house a "Starter home?"

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ou are operating under the delusion that something is only an investment if it goes up. There are such things as bad investments. I bought my first house in the best school district in the area. Not because I ever planned to have a kid go to that school, but because it was a smarter investment, because it would sell easier. Of course, sometimes renting is the better option. But that doesn't mean that you just buy a house like you buy any luxury item that is disposable. Some people actually look at the purchase as a required place to live AND as a financial investment. May not be trying to flip real estate, but possibly cover some expenses or make a profit in some (although rare) cases. Yes it can flop, but iPhones might start exploding tomorrow and Apple stock would plummet. Doesn't mean that owning Apple stock isn't an investment.

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Apple stock is a whole lot easier to value than a home, first of all. Second, sound financial decisions includes a home well within your budget, and presumably quality of life dictates what area of town you want to live in. And buying in a great school district because it will sell easier is about liquidity. You want to be able to move the house more quickly and have higher chance of demand when you sell. You had to pay up for that comfort, no doubt, but it gave you peace of mind.

I feel like we are talking about both sides of the same coin. My point is to not think you will make money on your home and be able to trade-up to a bigger home based on the increase in value. That is where people get into trouble. Picking a home because its in an area you like and that sells more quickly is fine. I would never recommend against that. I don't call that an investment, though.

I am a very financially minded individual with numerous degrees and certifications in that area, so I think we are just using different jargon. In my field, that is not an investment.

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Picking a home because its in an area you like and that sells more quickly is fine. I would never recommend against that. I don't call that an investment, though.

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I see what point you are trying to make and I don't consider my primary house a "speculative" investment. But the act of buying versus renting MAKES it an investment.

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The only thing that makes something a "starter home" is the intentions of the buyer. Your starter home might be someone else's forever home.


Huh. Never looked at it this way.

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This is pretty much the way I look at it. Intentions drive whether something is a starter home or not. For instance, you can have a pair of teachers here in Louisiana finish school and within a year they buy a 3/2 ~1900 sq ft house valued at 230k. Being that their income will never be much greater than it is today, they may view this house at a forever home.

Then, you could have an engineer married to someone in grad school buy the house next door with the same specs, but with the intention of upgrading homes in a matter of 5 years, because their income will greatly increase in that time period.

Some people may actually view the term "starter home" as insulting because one man's forever home may be another man's starter home.

I think we are treating a home purchase the same as well, but I just don't agree that it can't be defined as an "investment". I think of it as you are going to have a sunk cost in room and board. Let's call it $1000 a month for the comfort level and area you require (be it rent or mortgage). That's out the window. Compared to renting, home ownership is an investment to recoup some of that sunk cost. It's technically not a "profit", but if invested correctly, can save you thousands. And I would say the value of one's house is the largest value held in their portfolio. It is likely the largest factor in a majority of individuals net worth. So maybe you are used to valuing investments regularly to the point that this doesn't count, but to the average (and even above average) person, it's definitely where there life savings is invested. So I get what you are saying, but define it a bit differently I guess.

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Starter home

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