Rocket Homes surveyed 1,170 U.S. residents, 997 of whom already own a home, to see which amenities are desired. With the post-pandemic housing market still seeing high demand and steadily increasing prices, home buyer strategies and attitudes toward starter homes have changed.
In the past, the motivations for buying and living in a starter home have been clear, as starter homes tend to offer a way for first-time homebuyers to get their foot in the door of homeownership.
The timeline of homeownership looks a little different for each generation—both with respect to the average age a person wants to buy their first home and the age at which they actually do. On average, non-homeowners in 2021 expected to pay $180,000 for their first home.
Data shows millennials own the most expensive starter homes in the country. This group of 25- to 40-year-olds spent an average of $167,500 on their very first home, compared to baby boomers who spent just $85,000 on their starter home.
Timelines for purchasing starter homes varied slightly by generation, but the length of time between when individuals wanted to buy a home to when they actually bought their first house did not. On average, generations were all looking at a timeline of 2.6 years longer for purchasing their first home than they originally anticipated. Baby boomers were the most off in estimating their purchasing timelines and waited an extra four years beyond their presumed plans.
Homeowners typically purchase a starter home with the intention of one day having enough cash or equity saved up to upgrade to a home that has more space and amenities or a better location. However, it’s important to not make the jump from starter to forever home too quickly. Homeowners should plan to spend at least three to five years in their starter home to maximize return on investment and avoid losing money when they sell.
When asked about reasons to consider a starter home, some 42% potential homeowners most commonly believed it would help them ease into homeownership. While starter homes certainly can make homeownership more accessible to those with smaller budgets, it’s important to understand the risks that come with them.
For 35% of respondents, buying a forever home right away simply was not an affordable option. For more than a third of respondents, however, a starter home was simply an opportunity to try out a new location.
When looking at the different generations, the most desired starter home features were:
- Smart home technology
- Primary bedroom with walk-in closet
- Hardwood floors
- Kitchen island
- Open floor plan
- Kitchen island
- Hardwood floors
When it comes to buying a new home, an important consideration is whether spending less money on a home in need of renovations is preferable to buying a move-in ready home that puts them over their budget. Sixty percent of future homeowners preferred making their own renovations, which can give them the ability to upgrade their home to their liking.
When it comes to selling their homes, millennials were the most confident that they’d make a good profit, with 88% believing they’d receive a high offer. While baby boomers were less confident in their selling price, an impressive 82% believed they’ll get top dollar if they decide to sell.
Despite price challenges, homeowners and first-time homebuyers today are following in the footsteps of the generations of homeowners that came before them: buy a starter home first, then work up to one day owning their dream house or forever home.
Click here to view the report from Rocket Homes in its entirety.