To say that today’s housing market is tough would be an understatement. Today’s homebuyers are grappling not only with limited inventory and exorbitant prices, but also with rising mortgage rates. And now that the Federal Reserve has dramatically raised interest rates for the second month in a row, borrowing for a home could get even more expensive.
If you’re a first-time home buyer, you might be extremely frustrated with the lack of options in today’s real estate market. But Shark Tank’s Barbara Corcoran says first-time buyers should be prepared to be flexible when it comes to buying a home.
Enter the game
In a recent interview with Yahoo Finance, Corcoran insisted that the best thing first-time home buyers can do right now is “get in the game.” Specifically, she said, “Go in with any house you can possibly buy…and trade it in.”
This is advice to take into account. The reality is that many buyers are struggling today because homes are expensive and options are limited, so they struggle to find their dream home. But you don’t have to make the first house you buy the home of your dreams. Instead, you can do what people have been doing for years and settle for a departure house.
There are actually a number of benefits to buying a first home. On the one hand, you could pay a lot less and end up with a mortgage. Second, if you’re new to home ownership, the thought of having to maintain a property can feel overwhelming. Starter homes tend to be smaller, which means you can spend less money and do less maintenance work.
Equally important, in today’s overvalued market, a first home could be your ticket to breaking the cycle of paying rent. Once you start building equity in your first home, you can use it to increase in height in a few years. But if you don’t buy that first home, it could take even longer to get started on buying your dream home.
It’s not always a bad thing to fix
There are certain aspects of a home that you can and should consider as a deciding factor. If you have kids, you don’t want to buy a house in a terrible school district, and if you need access to public transportation because you don’t drive or own a car, you can’t buy a house in a neighborhood without bus or train.
But there are some things you should be prepared to make compromises when it comes to buying your first home, and these include square footage and upgrades. Of course, in an ideal world, you would be able to make an offer on a house that you could see yourself living in forever. But today’s housing market is far from ideal – it’s prohibitively expensive and highly competitive. And so if buying a starter home is what it takes to get you into the game, then it’s worth going that route – especially since you’re not committing to living in this house for the rest of your life.
We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.