I would buy what I could afford.
Our first home was a condo simply because it was all we could afford. If you can't afford what you want, then the best strategy is to start small and potentially move up. I'd say this is an excellent strategy.
After that we moved somewhere considerably cheaper and bought our dream home. We saved a lot of money by not going to the "start small and move up" route again. A move would cost much time in stress in moving, and with housing prices here the realtor fees could easily top $30k. (No I would personally never buy or sell without a realtor). Plus our property taxes would skyrocket with a move up, etc. Since we could easily afford the higher end, we grabbed it. & this really made the most sense in this case.
The only deciding factor between these 2 very different strategies was the affordability. Moving up costs a lot of money, particular when real estate prices are high. I would only go that route if I could not afford what I wanted right now.
Likewise, today affords the opportunity to wait until you can afford what you really want. That concept is a little foreign to my own experience, but another strategy worth considering.
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