I found the results of a study of recent homeowners conducted by NerdWallet fascinating. Their Home Buyer Reality Report divided answers to a number of questions about the homebuying process into different generations, which clearly shows different experiences. One thing I found very interesting were the two highest regrets for Millennials…
… "things I valued changed"… and "should've purchased larger home". These seem to me to be related, just as "mortgage rate too high" and "should've waited longer" seem related.
An important question to ask when you purchase a home is how long you plan to stay and how your life will change while you are living in the home. Often first-time homebuyers are just thinking about now… either living alone or with a significant other and loving a vibrant, urban neighborhood.
As people settle down and start to raise a family priorities usually change… which often also results in outgrowing space. This doesn't mean you shouldn't buy a smaller home in an exciting urban neighborhood if you are buying your first home and that is where you want to live… just do it with an awareness that your life may change in the future and this home may no longer fit your lifestyle.
With interest rates among the lowest in history, some buyers are looking ahead and purchasing the most home they can afford so they can grow into it and not need to sell and buy again because of outgrowing the space too quickly. It costs you money each time you sell and buy… interest rates will likely be higher the next time you sell… and payments that seem like a stretch now may seem low as your income grows… all compelling reasons to stretch a bit now as you plan for the future.
Sharlene Hensrud, RE/MAX Results – First-Time Homebuyer Realtor