starter homes

For years, one of the crucial elements in the country’s housing market malaise has been the lack of starter homes. Fortunately, that situation is slowly easing with a number of caveats.

First, there are still 300,000 fewer affordable units on the market today than there were pre-pandemic. Also, in 2019 starter homes cost $256,000; today they sit at $344,000.

The South, specifically Florida, Texas, and the Carolinas have seen the greatest increase in starter homes – approximately 170,000. The Northeast and Midwest are actually worse than before the pandemic.

Again, the overall national trend is positive with rising inventory and moderating prices.

Given the cost of new construction, it’s not surprising that more and more new homebuyers are opting for older – and smaller – homes for their “‘starter”homes.

Besides price,there are other advantages as well. Older homes tend to be in well-established neighborhoods while new construction development often has a cookie-cutter feel, with all homes looking pretty much the same.

Also, these older homes are often smaller than their new counterparts and thus, easier to maintain, especially for the Boomer of Gen Z generations.

Some realtors encourage their clients to go with older homes on the basis of sounder construction.

A starter home used to be what you used to get your foot into the housing market door – a small, affordable abode to literally “get you started.”

Now there are currently 28 states with at least one city where the median price for a starter home (priced at or below 80% of the area’s median) is $1 million or higher.

The median first-time buyer is 38 years old.

Maine, Vermont, Ohio, and Pennsylvania are all states where no cities with starter homes in the $1 million range.

A recent article in the New York Times highlights an important facet of the nationwide housing crisis: starter homes are no longer being built. Homes that are affordable for young families just starting out or recent immigrants trying to get a foothold in their new country.

The reasons are many: land and building materials are much more expensive, rules and regulations are much stricter (and the fees higher).

Analysts say that one solution may be to go back to what starter homes looked like 100 years ago: duplexes and rowhouses.