Make Your First Home Your Last: The Case for Not Moving Up

It’s a tough moment for big decisions. Think more about what you’ll want in three years — and not just three months, when we’ll still be shut in.


By Ron Lieber

Home has become work and school for millions of people. Many residences needed to somehow shift overnight to accommodate two workplaces and multiple classrooms because of the coronavirus.

With schools and businesses signaling that these conditions will extend at least through the spring, it’s no surprise there is a stampede of people seeking more space. But when so many are acting on instinct, the best move may well be to slow down and ask some counterintuitive questions.

Try this one on for size: Should the house you’re thinking of as a starter home be your forever home instead?

This is a tricky subject, like many of the biggest questions in personal finance, because of the complex stew of money and feelings that are involved.

First, the money. A home is an asset with a value that could make up a substantial proportion of your net worth. Hopefully, that value grows over time. And right now, with mortgage rates at record lows, it’s tempting to go as big as possible.

But there are other things you could do with any extra money that you might otherwise put toward a bigger or better home. That incremental amount could go into retirement savings instead, or a 529 college savings plan. Or you could give it away to people who don’t have the luxury of contemplating these sorts of trade-offs.

The case for staying small need not be some scolding ode to parsimony. A more modest home can leave more money in the budget for travel, expensive hobbies, or a getaway abode by a lake or mountain. Living smaller also helps the environment.

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