Life Cycle: Small to Big to Small
Our oldest son Kai goes to college tomorrow. On the one hand, I am glad he's making his own future now. On the other hand, I know that I am not going to enjoy any more high school soccer games, and will have fewer Apples-to-Apples and ping-pong challenges with him gone...in any case, we know that there is now a spare bedroom in our home (until he comes home during the holidays!)
This got me thinking about life, and the cycle for real estate ownership. Normally people don't start thinking about investing in real estate until they get married or kids come along. Only the smart ones see that real estate is a great long-term investment and start early, as soon as they graduate from college. They normally start with a small condo or a townhouse, and using roommates and tenants they manage to have this home pay for itself.
For most people, then comes either marriage or serious professional development. While in their 30s and 40s, people start thinking about real estate as a way of increasing their net worth and providing a roof over their heads without paying someone else's mortgage.
First-time home buyers normally look for smaller townhomes, duplexes or single family, detached homes (1,100-1,500 sq. ft.). When the family (or income, or both) grows, people tend to want to upsize and upgrade their home. Room to move and live is important. A game room or home theater, a yard, a deck and a place for entertaining guests become more of a priority. Some make a regular transition to the multi-million dollar, custom-built homes, others stick to a 4-5 bedroom production home. Most want to buy a newer home, with fewer maintenance headaches, in an area where like people live (i.e. if it's a couple with young kids, they normally like to live in a neighborhood with lots of young families). Commute times and schools become important factors. Size for second-purchase homes normally ranges from 2,000 to 5,000 sq. ft.
And then the kids leave, couples become empty-nesters or retire. This is life stage is when most people may enjoy (and have the time for) gardening, hobbies, honey-do projects around the home, golf, etc... Normally, these buyers want a 3-4 bedroom home (a comfortable master bedroom (downstairs), an office and one or two guest rooms) and desire smaller square footage for ease of maintenance (1,200 to 2,500 sq. ft.). Hopefully located in a warmer place (yes, many Northerners do get tired of shoveling snow and salting their driveway during the winter months, and this is one of the reasons why Charleston is very popular with retirees!). And they may want amenities such as golf, tennis and definitely a good health care system. We are blessed in Charleston, since we have the most important medical hub in the state (the centerpiece of which is MUSC - the Medical University of South Carolina).
From small - to big - to small again. Home size follows family size, stage in life and budgets...