A Guide To Buying A Starter Home Vs. Permanent Residence

There’s no other way to go about this, but the current economic climate treats us exceptionally poorly. Inflation hangs around our necks while we face the danger of an impending recession pummeling us to the ground financially. In such unstable times, we must find hard assets that withstand harmful economic trends. 

Real estate is the way to go!

First and foremost, consider some bright ideas for investing before a recession. Still, let us highlight any economy’s indispensable element, which you might wish to prioritize over the others, namely real estate. While inflationary trends are on, the value of real estate will grow exponentially from two essential perspectives, 

So first-time homebuyers and real estate investors, buckle your seatbelts and check what the 2023 real estate market trends will bring you! Based on these predictions, you can decide whether you invest in starter or forever homes!

Good for homebuyers

People will always want to buy or rent a low-cost home. As rents are exposed to inflation, their value will further increase. For this reason, many will decide to buy their first-time home in 2023. First-time homebuyers will undoubtedly look for reasonably-priced properties. However, they might need to learn that the US housing market has been experiencing major setbacks, such as rising building material prices, new constructions getting pricier, and applying for a loan at high-interest rates.

Ideal for real estate investors

Indeed, there are other fine investment opportunities out there. But putting your faith and money in real estate can bring you a big buck. Hard assets, under proper management, won’t lose value despite hard times. You can sell a property at a higher price, rent it out, run it as Airbnb, or use it as business headquarters. Your investment will be safe and can bring you substantial side revenue.

Identify your priorities! Starter home vs. permanent residence

Before deciding which one you purchase, we suggest putting together a list of pros and cons and establishing a hierarchy of priorities. Answer the question of whether the location will suit your future needs. If you plan a short-term stay but want to dip your toes in owning real estate, go for starter homes. If you’re ready to settle down, buy a forever home!

Whichever you choose, there are specific steps you have to take. For starters, get a mortgage preapproval that will give an authentic picture of your financial situation and set your property research within reasonable boundaries. 

Is that particular property worth purchasing?

Before signing any document, the home inspection results and appraisal should be in your hand! Therefore, you can form an informed opinion about the foreseeable expenses of home renovations to get your place in great shape.

Do the math and add up all the following costs before buying: moving costs, external and internal repairs, mortgage rate, home insurance, and expenses associated with property purchase, such as closing fees.

Don’t forget to think in long-term perspectives, either! If the neighborhood’s economic prospects aren’t too bright, your chances of selling your asset for a profit will diminish considerably. For this reason, we also recommend investigating the local economy before buying! Is the unemployment rate low or high? Is the job market thriving? Does the local government support local businesses? Are there any ongoing or future development projects? If the answers are mostly positive, don’t hesitate to buy that starter home or permanent residence!

Young careerists will pick starter homes.

Suppose you’re a career-driven individual ready to face new challenges in another city. In that case, we recommend you entertain buying a starter home. Typically, younger homebuyers prefer a tinier property, like a condo, for a starter home. A starter home retains some of the perks of renting, such as (financial) flexibility. 

Often, they don’t come equipped with the most convenient amenities. Yet, they are more affordable than forever homes. Moreover, young buyers don’t have to wait years till they finally gather the down payment. You can purchase a starter house or condominium at a lower price point. In the meantime, you will enjoy lower property taxes, and such an asset won’t require significant maintenance. However, you must expect to spend money on pre-sale home repairs!

We advise staying at least two years in a starter property. If you stay between three to five years, you can escape capital gains taxes and make money on your investment.

Build home equity with a starter property!

Another essential advantage of purchasing a starter home is building home equity (which tenants can’t do.) Your property equity means an asset’s actual value that you own without mortgages and liens (the bank owns the rest.) The more loan on your home you manage to pay off, the more equity you can build. 

Developing this vital financial tool will give you an edge in getting home improvement loans or paying off debts. Secondly, applying for a home equity line of credit (HELOC) will become a piece of cake. Or, you can decide to cash out your investment to date.

What should you look for in a permanent residence?

You can enjoy being part of a community by purchasing a forever home! A forever home entails settling down indefinitely, establishing a family, or getting ready for retirement. Since you’ll spend a lot of time here, the property must be spacious with (at least) two bathrooms, a roomy and updated kitchen, and a sizeable backyard. It will help if you choose a safe neighborhood with easy access to means of transportation.

What are the pros and cons of forever homes?

By all means, sellers know these advantages and will ask for a higher price. However, from an investment perspective, they will bring you a more impressive ROI if you re-sell them. No wonder permanent residences are significantly more expensive and in demand than starter homes.

Owning a forever home implies a higher degree of customizability, for instance, installing intelligent, eco-friendly gadgets that will only boost your home’s value. 

On the downside, owning a permanent residence comes with higher upkeep costs and more expensive insurance. Secondly, you must invest more time and energy into its maintenance and repairs. Lastly, selling a permanent residence for the price you wish takes more time, and the sooner you sell, the less home equity you will benefit from.


Both starter homes and permanent residences make excellent investments in times of inflation. The first is embraced by young people who don’t wish to pay rent. Instead, they will benefit from the advantages of building home equity that will bring a substantial return on their investment. In addition, you can rent out starter properties if you hold onto them, presenting an extra source of income. Think of it as a test run before purchasing a larger permanent property!

On the other hand, forever homes serve as an ideal nest for established couples looking to raise a family. Though living in permanent residences requires more energy, the value of such assets can spectacularly surpass your original investment if you decide to sell.

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