Sorry… Your First Home is NOT Your Dream Home
Dear First Time Buyer,
I’m sorry to be the one to tell you this, but your first home will (more than likely) NOT be your dream home.
We’ve all dreamed that American Dream of owning our very own home. For many of us, that dream has morphed into the HGTV dream, which includes sparkling countertops and appliances in an open-concept kitchen, plenty of outdoor space for entertaining or for a dog and kids to enjoy, off-street parking and yes, a walkable location in the heart of the action. Who wouldn’t want these things? I know I do!
It’s easy for us, as buyers, to get ahead of ourselves and either:
- search and search and search fruitlessly for a home that doesn’t exist;
- stretch your budget to an uncomfortable level to keep up with your idea (or more likely your friends or family’s idea) of what your first house or forever home should be OR
- put off buying until you can afford to buy “The Dream House” when you are making more money down the line, before getting engaged, married , having kids , or whatever it is that you are using to justify the decision to wait to buy a house.
I see this scenario time and again with many of our first time buyer clients and with my friends. They beat themselves up because they can’t afford their dream house, or they know they’ll be making more money soon, so they wait. Interest rates go up, the market continues to rise, then they are in the same boat when they come back to explore buying the next time around. Each time they wait, they see that prices have gone up yet again, they’ve lost money to rent and lost out on the money they would have made in the value of their home going up had they bought.
I’m here to tell you some advice that might be hard to swallow for my fellow millennials (and you too Gen Z).
If you can realistically afford to, you need to pull the trigger and buy a house (or townhouse or condo) that is comfortably within your budget to get your foot in the door of homeownership.
Yes, even if that house is smaller than you imagined, has avocado green tile in the bathroom and mustard yellow appliances in the kitchen, or isn’t in the exact neighborhood where all of your friends are renting or may even own.
Why you ask? It’s simple. Homeownership is proven to be one of the best ways to set yourself up for a strong financial future, especially in the relatively stable DC Metro area. Instead of writing a (sky high) rent check to your landlord, you can pay a similar amount for a mortgage – with a big chunk of that payment going to pay down your equity. You are basically paying into a built-in savings account for yourself. Not to mention, you will start seeing a much better tax break from Uncle Sam just for owning a house. And prices in our area just continue to rise meaning homeowners are seeing huge gains in their equity (and ultimately their wealth and net worth).
Some may argue that you should wait and save – and wait and save – until you can afford a house that you will be in for many years to come – and maybe you should! It really depends on your individual situation. But for most first time buyers, the reality is that they will NOT be in the same house for many years to come. Maybe they know they will leave the area, or know they will want to have kids (or more kids) and need more space or a different school system, or know they will be making a lot more money down the line. The point is, people’s lives, needs, tastes, preferences and finances change over time – and their homes usually change with them to reflect those shifts.
So, brace yourself and buy a house that’s a sound financial investment, even if it isn’t that sexy first home you envisioned. Get your hands dirty and make it yours.
In a few years, you’ll have paid down your mortgage enough to buy something a little bit bigger and a little bit better. Rinse and repeat. Soon enough, you will be in your dream home.
My advice? Be different. Be smart. Be a homeowner and set yourself up for financial freedom in the future. I promise, you’ll thank me later, even if I’m dashing your dreams of that perfect first home now.
All my best,
P.S. Thinking of buying your first home? Download our first time buyer’s guide here. We’re also happy to meet with you at anytime to talk about if homeownership is the right choice for you. No obligation & no judgement! Just fill out the form below.
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