Often, it’s more practical to buy one home that works throughout your life cycle. Young people should stretch their expectations for a first home. They should ask, what kind of house do we reasonably need to raise a family? Then buy a first home in a good school district.
Children can be raised without two rec rooms, a dedicated home theater, three and a half baths, and a huge back yard. What children want most is to be close to their parents, and more sensible, but not cramped space works well.
My wife and I raised a family in a moderate-sized row house in the historic district of Alexandria, albeit with a family room that served multiple purposes, 20 minutes from the White House. And we met a lot of interesting folks taking our children to city parks.
As empty nesters, we live comfortably in the same dwelling with the prospect of retirement in a home not too burdensome to maintain. The mortgage is paid and all that money we did not spend on realtors, lawyers and mortgage bankers will make retirement more comfortable.
Bottom line: Buy a sensible home to raise your family, and it will prove a sound investment over the long haul.
Peter Morici is an economist and professor at the University of Maryland Smith School of Business, a national columnist and five time winner of the MarketWatch best forecaster award. Follow him on Twitter @PMorici1.