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My husband and I are on our third "starter home". Our mortgage payments have always been less than rent would be, we've bought and sold at the decent times in hot markets, and we don't feel the need for bigger/better/fancier. Our first, a condo, we spent very little on fixing it up because it didn't need it, and we got out with a nice down payment on our next house. We have put some reno money into our last two, but we made our money back plus extra on the first, and we're planning on staying in this one therefore all the fixes have been for our comfort/taste and not profit-making.
So none of the article would apply to our experience.
A couple of disclaimers he made in that rehash of his original post which would have boosted his credibility from the start:
"A few additional thoughts:
*I don’t know everyone’s personal situation, so it’s impossible to make a blanket statement on these things. Buying a home is always situation-dependent. The numbers can change depending on your down payment, geography, local market conditions, rent vs. own comparison, current financial situation and future plans. I just think young people need to put more thought into this decision beyond “I’m sick of paying someone else’s mortgage” or “I’ll just trade up in a few years.” That’s not enough for a decision of this magnitude.
…
*Young people shouldn’t feel pressure to buy a home simply because everyone is telling them it’s the logical next step on their road to adulthood. There’s no shame in renting to give yourself increased flexibility and time to get your financial house or career in order before becoming a homeowner. Buying a house involves much more than simply comparing your current rent payment to the potential monthly mortgage payment on a house. It’s not a decision you should take lightly."
location is the biggest factor and local market conditions .
my son bought a starter home , lived in it 2 years in scarsdale ny .. it was 1800 sq ft . they out grew it and he sold a few months ago . it sold in 2 days at list and he broke even after realtor fees and renovations . taxes were 20k .
he moved 15 miles north and got over 4000 sq ft with 23k in taxes in ryebrook .
everything is priced by school district and whether the town has a dedicated train station to nyc .
since ryebrook has no station of it's own and instead of being the best school district it is a notch below . but you can buy a house more than 2x the size for not much more than that starter home was .
the starter home sold for 1 million , the one he bought that was more than 2x the size was 1.25 million .
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Since the interest is "down the drain," to me it makes more sense to buy a cheaper house, not a more expensive one, if that's your criteria.
actually tax wise it is the renter who may have the best tax deal .
while the homeowner may be paying thousand in real estate taxes and mortgage interest , many renters have little to deduct and so they fly the empty seats of the standard deduction .
they have no money coming out of piggy to see those deductions come back , and get to keep a whole lot more of that standard deduction , especially if a couple
Yeah, I'm buying my retirement home and it will be in the price range and size of a starter home. I don't need anything presumably "nicer."
Retirement is when those people who stayed in the so-called "starter" home have the last laugh. They don't have to bother downsizing or moving!
Speaking about retirees returning to the starter home, I thought it was funny how our realtor talked about us once again getting a "starter" home. I guess he figured that sounded happier than calling it an "end of the line" home.
(By the way, we're very happy to be back in a small house again. "Starter" homes rock!)
I think the idea of buying a starter home is one of the worst moves you can make financially as a younger person. Buying a starter home will likely cost you way more money in the end as opposed to waiting until you’re ready for a more high quality home. Around 70% of your mortgage payments in the first 5 years will go towards interest costs on your loan, so you build up very little equity in a starter home by the time you’re ready to move. Then you end up spending a ton of money trying to fix the place up. And when you do decide to trade-up to a nicer place you end up paying closing costs and realtor fees. In the majority of cases it will prove to be a far better move to rent for a few more years and save enough money until you can afford a nicer house. At that point the pros far outweigh the cons because of the sense of community, place to call your own and the psychic income involved.
I did not read the article, but based on the above, I think it is a matter of the real estate market one is in.
In 1977, my husband and I bought an older home for $60k in SoCal, fixed it up just slightly, and sold it for double what we paid for it six years later. In 2012, we bought a "fixer upper" in a nice neighborhood in the Denver metro area, and after deducting the cost of the repairs, we would still clear $100k profit on it in we sold it today. (And when we bought it, the mortgage payments were just about $200 more than the rent we had been paying for three times as much living space, a two-car garage and a yard. Today, we would have to pay about $600 more for rent than our mortgage payment.) After including the mortgage deduction, we did MUCH better financially than if we had just rented.
However, if we had lived in an area where the market was depressed, it might have been an entirely different outcome, of course.
Retirement is when those people who stayed in the so-called "starter" home have the last laugh. They don't have to bother downsizing or moving!
Speaking about retirees returning to the starter home, I thought it was funny how our realtor talked about us once again getting a "starter" home. I guess he figured that sounded happier than calling it an "end of the line" home.
(By the way, we're very happy to be back in a small house again. "Starter" homes rock!)
The only caveat to that is that it has to be easy to maintain. It has to have relatively modern electrical, plumbing and HVAC systems.
My first "starter home" was a maintenance nightmare, because with zero home owner experience, we really didn't know what to look for in terms of maintainability and structural integrity. Cannot imagine living in that place at retirement.
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Our mortgage payments have always been less than rent would be, we've bought and sold at the decent times in hot markets, and we don't feel the need for bigger/better/fancier. Our first, a condo, we spent very little on fixing it up because it didn't need it, and we got out with a nice down payment on our next house. We have put some reno money into our last two, but we made our money back plus extra on the first, and we're planning on staying in this one therefore all the fixes have been for our comfort/taste and not profit-making. 
