Your first home. At first, it can be an exciting milestone. It's a place to call your own, a stake in the ground, a place where you can lay down some roots. But eventually, a starter home can be just that—a home limited to the starting portion of life. And as you get on in years and you build up equity, you may need to upgrade the size of your home.
The problem: when interest rates go up, you'll have fewer options for upgrading your home. So what's the next step? It starts with figuring out whether now is the time to upgrade.
That begins with an assessment: are you really outgrowing your own home? Let's look at some of the top signs someone has outgrown a starter house:
A changing family size
Not so long ago, the average first-home price was between about $100,000 and $150,000, and while times are certainly different now with home prices soaring, it's likely your starter home was a smaller, much less expensive purchase than what you're now shopping for.
A family's starter home was typically the smallest house homeowners ever owned, depending on life circumstances. When buying a starter house, after all, you're usually buying a house when you're either single or married without children. That might be perfect if you have one or two people in it. But families grow.
The average starter home, for example, is only about 1,200 square feet, roughly the space of a two-bedroom apartment. What happens when your family goes from two to three? Or three to four? The space around you seems to shrink. And other options—like working from a home office or building an exercise room—start to look less and less like they'll ever become a reality.
There can be other family needs besides children. An aging parent or relative, for example, can tighten the space in your home. Someone with mobility issues can require more space physically. If that's the case, you know when you need a larger, more accessible house for making everyone's lives easier.
You're running out of storage
Consider this an extension of the essential problem of running out of space. Your home might seem plenty spacious when you move into it, but with changing families come changing storage needs. Strollers, toys, clothes, bikes, vehicles. Most starter homes simply don't offer the space to make living practical for families.
Don't neglect the advantages of plenty of storage space, either. Without a cluttered home office, you can get more work done. Your children have more space to play if the living room isn't cluttered. Lack of clutter and more chances for storage enhance every aspect of the way you live, making it easier to get around and live your life without distraction.
Entertaining guests in your home
It's a common promise for someone acquiring a starter home—"as soon as we move in, you can join us for a barbecue!" Then, when it comes down to entertaining, you realize that a starter home isn't exactly up to par. A small kitchen and dining room can be enough space for a small family, but hosting is a different story. Having relatives over for Thanksgiving or Christmas dinner requires ample space for everyone—and it's always obvious when the space isn't there.
Building a dedicated home office
By 2025, more than 70% of the workforce is expected to telecommute at least five days a month. More and more, people are finding that the ideal commute is the one you can do across the hallway in your slippers. A dedicated home office not only gives you a chance to break free of the distractions of home life, but to have a perfectly fulfilling and productive career just a few doors down from your bedroom.
The problem is that starter homes are rarely suited for a home office, unless your family space needs are low. Upgrading your home or moving to a larger home can give you the space you need to work effectively from home in a distraction-free environment.
Getting a new location
What if you don't notice the walls closing in on you, but you do notice that your home feels like it's on the wrong side of the road? There's that old saying in real estate: location, location, location. When you first bought your house, you may have wanted to live near the city or downtown thanks to the proximity to work and nightlife. But as your family grows, you may find that a quiet suburb or rural setting suits you better. And when home prices are high, these locations can afford you more space for the dollar.
How to move on from your starter house to something new
It can sometimes feel like a challenge to picture yourself in a new house. A starter home has a certain sentimental value that you can't put a Zillow price tag on. However, you should remember that the practical benefits of upgrading your starter house to something bigger can make for even better memories in the long run.
Perhaps more importantly, making the move at the right time can be in the long-term interest of your family's financial future. Securing a home loan when interest rates may only be going up can mean that you've taken a good chance while it was there, especially if you find a new home in a great location. And given the market conditions, there's always the possibility that your starter home may be worth much more than you bought it for, which means you can more easily fund your next home and all of your expanding space needs.
Preparing to move
Is it the right time to upgrade your home? Then it's time to get your current house ready for sale. Reach out to a real estate agent for showings. Ask them what you can do to make your house appealing to potential buyers: painting the walls, removing clutter, or even staging photographs.
It's also time to think about the most exciting aspect of this journey: securing a new home for yourself and your family.
