Buying a home for the first time is stressful and expensive.Find the more buying homes from SHINE.And thanks to flat salaries and the skyrocketing prices of fixed costs like college, health care and rent, millennials are buying far fewer homes than the generations that preceded them.
But the young people who are able to purchase a house are making one crucial mistake: They're jumping straight to large new homes without considering smaller models or fixer-uppers.Dana Bull, a realtor with Sotheby's in the Boston area, calls the millennial homes of choice "starter castles." Those homes are often stunning, she tells CNBC: "Whether it's in the suburbs [or not], they're buying properties with new construction, new developments, everything is done to the nines."I think that's great if you've thought about the financial situation and your top priority is having a beautiful place to live that you can enjoy," she says. "But I do think that millennials kind of do themselves a disservice if they don't understand how the numbers work with a fixer-upper."As a 28-year-old real estate agent, Bull understands the millennial perspective towards home buying. You've saved up and want to get the best deal for your money. But she often sees younger buyers fail to explore what else is out there."The biggest mistake isn't that people are buying starter castles, it's that they aren't exploring their options, and they're making kind of a knee-jerk reaction to based on perhaps what they know," Bull says.But any young buyers with the drive and interest in making a few renovations themselves could benefit from customizing a fixer-upper, which are often much cheaper than newer models. If you're buying new construction, all new new new, the second you move into it, it always depreciates in value for a little bit," she explains. "That's different from a fixer-upper where you can go in and you can add value and get the property that you want while reaping the financial benefits of taking the property from zero to 10."However, it's important to know what you're getting into with a less-than-ideal abode. Home buyers should always do their research first to make sure the renovations are something they're able to handle.She warns against becoming "somebody that just opts for the fixer upper and doesn't consider the impact that it's going to have on their lifestyle or their wallets as they're living through the renovations and construction."
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June 2018
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