Here’s What Happens When You Outgrow Your Home Shortly After Buying It

There’s a reason first-time home buyers are often encouraged to purchase a starter home — a smaller property that may not be so updated. Starter homes tend to be less expensive, which means a smaller mortgage payment every month. These homes tend to require less maintenance, which is a good way to ease into homeownership.

This past June, the typical starter home sold for $243,000, according to Redfin. But the cost of a starter home in your area may be higher or lower.

You may be eager to buy a starter home yourself. But be very careful when going that route, because you don’t want to buy a home you’re likely to quickly outgrow for one big reason.

Finding the right starter home is key

Many people buy a starter home with the intent to upsize a few years later. The logic is that those starter homes allow them to build equity so that down the line, they can afford a more expensive property.

That logic certainly makes sense. And it’s not a bad idea at all to buy a starter home with the intent to stay for five years or so, build up some equity, and then take on a more expensive home and mortgage loan once you can afford to do so.

But that plan generally hinges on you being in your starter home for several years. The reason? It commonly takes time to build equity in a home. Granted, people who bought homes in 2019 or 2020 might’ve seen their values soar in a couple of years due to the explosive demand that hit the real estate market when mortgage rates plummeted. But the typical buyer should not expect to purchase a home and then see its value skyrocket within a year or two.

Rather, that process tends to take time. And that’s why it’s important to be careful when buying a starter home. If you outgrow that property in a year or two, at that point, you may not have enough equity to go out and upsize.

So, let’s say you come across a two-bedroom starter home as a family of three (two adults and an infant). If you have plans to have two more children in short order, you may want to reconsider a home that size, since you might need more than those two bedrooms within a couple of years. And you may not end up with enough equity to upsize to a larger home as soon as you need to.

Make sure your home aligns with your plans

Plenty of people buy homes — starter or otherwise — before completing their families. But if you’re looking at a starter home, consider your plans on the family-building front before committing to a purchase.

It’s probably not the best idea to buy a home you’re very likely to outgrow within a couple of years. But if you think the home you’re looking at will serve your family’s needs for five years or more, then it could end up being a great buy for you.

Meanwhile, there are certain home features you can look out for that may reduce your risk of outgrowing it quickly. A home with an unfinished basement might fit that bill. Yes, finishing up that space costs money, but the option exists if you need it. Similarly, if you buy a home with a larger garage, you could conceivably add on a bedroom and just park your car outdoors.

You don’t necessarily need to limit yourself to a specific number of bedrooms or a specific amount of square footage. But it is important to try to find a home that gives you some leeway.