The 10 most expensive places to live in the world NO2

 

The 10 most expensive places to live in the world NO2 span>

1. It may require a lot of money.

Homes are bigger these days, so starter homes are often older and may even be fixer-uppers. You'll want to get a proper home inspection before buying and ensure you have enough cash to deal with repairs. Fortunately, fixing up the home can lead to a bigger profit when it's time to sell or rent, but you want to make sure it makes financial sense, too.

2. It's hard to find.

As discussed, there's a shortage of starter homes. As of March 2023, the average-sized home is 2,525 square feet, and you'll be paying for every inch. The lack of affordable starter homes could make for a frustrating home-buying experience, and it might not be worth the headache for a home you plan to move out of in only a few years.

3. You'll have to buy another home, move, and (potentially) sell.

The home-buying process is a lot to handle—and so is moving. But you'll have to do those two things again if you buy a starter home. Plus, if you're not keeping your starter home as a rental property, you'll have to sell it, which could be difficult depending on the outlook of your local housing market.

4. You could lose money.

Many people buy a starter home to increase their net worth, but the opposite can happen. If you buy in an area with a depreciating house value or have to invest too much money into fixing your starter home, it could cost you more than your profit. Also, remember that, in some cases, you'll have to pay capital gains taxes on selling your starter home before you move into a new one.

In conclusion

The starter home may be becoming a thing of the past, but the idea is still attainable in many U.S. Cities. Although millennials mostly chose to rent for longer to save up for their dream home, Gen Z is taking promising strides toward homeownership, tracking ahead of their parents' generation thanks to the pandemic-era low mortgage rates. If your dream home still feels years away, investing in a starter home may be a sound financial decision for you to build up your home equity and (potentially) break into the real estate investment market.

Methodology

The This Old House Reviews Team compared 100 of the largest U.S. Cities across six metrics to rank the best cities to buy a starter home. These six metrics are explained below, along with the data sources:

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Average starter home cost: This is the median value across the bottom third of priced homes in the area (fifth to 35th percentile). Data comes from Zillow and represents the average from May 2022 through April 2023.

Mortgage as a percentage of income: The average mortgage payment is based on a 30-year fixed-rate mortgage at 6.4% applied to the average starter home cost. Income represents the median household income for renters in the area. Data comes from Zillow and the U.S. Census Bureau's 2021 1-year American Community Survey.

Young homeownership rate: This is the number of owner-occupied housing units divided by the total occupied housing units for individuals under age 35. Data comes from the U.S. Census Bureau's 2021 1-year American Community Survey.

Concentration of restaurants: This is the number of restaurants per 10,000 people. Data comes from the U.S. Census 

Concentration of entertainment establishments: This is the number of entertainment establishments per 10,000 people. Data comes from the U.S. Census Bureau's 2021 County Business Patterns Survey.

Violent crime rate: This is the number of violent crimes per 10,000 people. Data comes from the FBI's Uniform Crime Reporting as of 2019.

We calculated an average ranking using the six metrics above, half-weighting the concentration of restaurants and entertainment establishments and single-weighting all other metrics. The top-ranking city scored 100, and the worst received a 0.

This story was produced by This Old House and reviewed and distributed by Stacker Media