My fiancé and I are considering buying a house. We're in our late 20s and plan on moving from our low rent apartment in a relatively upscale area to the house we'll potentially buy. Now we have two or three options when it comes to home buying.

Option 1. Buy a starter house, that will not be a significant upgrade on our current apartment. We can easily afford it. But I'm not sure about the return on investment. Especially considering the fact that we might have to buy a bigger house anyway, when we have kids. We plan to have kids within next two or three years.

Option 2. Buy a single family house. A relatively old one, built around 1960s and fix it gradually over time. e.g. finish basement, change appliance etc. If this kind of house is in the area that we live, which is what we want, it'll cost us an amount, that's in the mid range of what we're willing to spend. Our range is 220-320k. And let's say, this house will cost us 250k and we'll spend 70k over time.

Option 3. This is the option, my original question is all about. Let's say we buy a brand new built house (e.g. Pulte Homes), in the outskirts of the city, but in a rapidly developing area and out 300k towards it. Does this choice make sense in terms of the value we will get when we decide to sell the house, let's say in 7-10 years?

What is the best option from all the above in your opinion? And for what reason?

  • Thanks for editing the question. It was supposed to be a specific question related to Pulte, but I just wrote everything down that came to my mind as I was typing.
    – sdevikar
    Commented Aug 31, 2016 at 3:36
  • You should also consider 'Option 0': stick with your low rent apartment, and put your spare money into savings which you use to eventually buy a house you really want. Commented Aug 31, 2016 at 15:50
  • @DJClayworth: I have considered that option. Although, in my opinion, the interest rates on my savings will never match the rate at which the cost of housing appreciates. Hence, I will always be playing catch-up, unless I figure out a way to earn like 5% interest on my savings.
    – sdevikar
    Commented Aug 31, 2016 at 18:50
  • 1
    You have to factor in the cost of ownership as well. Commented Aug 31, 2016 at 19:06
  • Cost of ownership goes beyond just the monetary costs. Consider the extra time you would invest in upkeep. In an apartment, you have a lot more free time. If you can leverage that time to build additional income streams, just rent.
    – Jereme
    Commented Aug 31, 2016 at 22:04

2 Answers 2


Trying to determine what the best investment option is when buying a home is like predicting the stock market. Not likely to work out.

Forget about the "investment" part of buying a home and look at the quality of life, monthly/annual financial burden, and what your goals are. Buy a home that you'll be happy living in and in an area you like. Buy a home with the plan being to remain in that home for at least 6 years. If you're planning on having kids, then buy a home that will accommodate that. If you're not planning on living in the same place at least 6 years, then buying might not be the best idea, and certainly might not be the best "investment". You're buying a home that will end up having emotional value to you. This isn't like buying a rental property or commercial real estate. Chances are you won't lose money in the long run, unless the market crashes again, but in that case everyone pretty much gets screwed so don't worry about it.

We're not in a housing market like what existed in decades past. The idea of buying a home so that you'll make money off it when you sell it isn't really as reliable a practice as it once was. Take advantage of the ridiculously low interest rates, but note that if you wait, they're not likely to go up by an amount that will make a huge difference in the grand scheme of things.

My family and I went through the exact same thought process you're going through right now. We close on our new house tomorrow. We battled over renting somewhere - we don't have a good rental market compared to buying here, buying something older for less money and fixing it up - we're HGTV junkies but we realized we just don't have the time or emotional capacity to deal with that scenario, or buying new/like new. There are benefits and drawbacks to all 3 options, and we spent a long time weighing them and eventually came to a conclusion that was best for us.

Go talk to a realtor in your area. You're under no obligation to use them, but you can get a better feel for your options and what might best suit you by talking to a professional. For what it's worth, our realtor is a big fan of Pulte Homes in our area because of their home designs and quality. We know some people who have bought in that neighborhood and they're very happy. There are horror stories too, same as with any product you might buy.

  • 2
    +1 You had me at "Forget about the "investment" part of buying a home" Commented Aug 31, 2016 at 13:02

I encourage you to think of this home purchase decision as a chance to buy into a community that you want your children to grow up in. Try to find a place where you will be happy for the next 20 years, not just the next 2 or 7 years.

In your situation, option 1 seems like a bad idea. It will create an obstacle to having children, instead of establishing a place for them to grow up in.

Option 2 is close to "buying a house on a layaway plan". It offers the most financial flexibility. It also could result in the best long-term outcome, because you will buy in an established area, and you will know exactly what quality house you will have. But you and your fiancé need to ask yourselves some hard questions: Are you willing to put up with the mess and hassles of remodelling? Are you good at designing such projects? Can you afford to pay for the projects as they occur? Or if you need to finance them, can you get a HELOC to cover them?

Especially if you and your fiancé do much of the work yourselves, break down the projects into small enough pieces that you can quickly finish off whatever you are working on at the time, and be happy living in the resulting space. You do not want to be nagging your husband about an unfinished project "forever" -- or silently resenting that a project never got wrapped up. I posted some suggestions for incrementally finishing a basement on the Home Improvement Stack Exchange.

If you are up to the job of option 2, it is less risky than option 3. Option 3 has several risks:

  • You don't know what sort of people will live in the neighborhood 5 - 20 years from now. Will the homes be owner-occupied? Or rentals? Will your neighbors care about raising children well? Or will lots of kids grow up in broken homes? Will the schools be good? Disappointing? Or dangerous? Whereas in an established neighborhood, you can see what the neighborhood is currently like, and how it has been changing.

  • Unless you custom-build (or remodel), you don't control the quality of the construction. Some neighborhoods built by Pulte in the last 10 years were riddled with construction defects.

  • You will be paying up-front for features you don't need yet. You might never need some of them. And some of them might interfere with what you realize later on might be better.

  • In stable markets, new homes (especially ones with lots of "upgrades") often decline in value during the first few years. This is because part of the value is in the "newness" and being "up-to-date" with the latest fads. This part of the value wears off over time.

  • Are the homes "at the edge of town" already within reasonable walking distance of parks, schools, church, grocery stores, et cetera? Might the commute from the "edge of town" to work get worse over the next 5 - 20 years?

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