Mr. Canadian Budget Binder (CBB) has an advice for tentative home buyer: Pick the least expensive house in the most expensive neighborhood. Buying a high-end house will be harder to sell than smaller ones in the neighborhood once you need to move on. Mr. CBB points out that you also pay a premium for the extra space over the life of the mortgage. By buying a house that fits his family, Mr. CBB was able to pay the mortgage in full by five years. He recommends prospective home buyers to pick a smaller house in a good neighborhood.
Should you buy the least expensive house in a good neighborhood?
In most scenario, good neighborhoods determine property values. By buying the least expensive house in a good neighborhood, your house will have more potential to increase the property’s value after you move in. Also, there’s less chance you would overpay for the least expensive house.
Another advantage of buying the least expensive house in a good neighborhood is that you will get a far greater return on upgrades and remodeling than if you would do the same thing to the more expensive house in your neighborhood.