Are we finished with starter homes?
What in the world ever happened to the starter home? You know, the proverbial foot in the door of the American housing market. The light-on-frills, light-on-square-footage, but most importantly light-on-the-wallet property that young families can spend a few years in, build up some equity and then trade up to something bigger and nicer.
Well, starter homes still exist. But they look a lot different.
“Cute as can be” in San Jose
Isaias Castro raised his four children in a two-bedroom, one-bath house in San Jose, California. It’s now up for sale at $839,000, and the listing describes the 776-square-foot ranch-style abode as a cute as can be starter home.
Castro bought it for around $300,000 more than 20 years ago. Back then, he was a driver for a local medical supply company. Bay Area housing wasn’t cheap in the early 2000s, but it was at least possible for Castro to get his foot in the door.
Now he’s selling partly to be closer to two of his adult children — both moved to California’s much cheaper Central Valley to find starter homes of their own.
“They tried to buy something here, but it was too expensive for them,” Castro said in Spanish. “That’s why they left to buy out there.”
Mina Fernandez, Castro’s real estate agent, has been trying to market the renovation potential of the home to first-time buyers. While the house itself is small, the lot and backyard have ample space. In the pricey Bay Area, adding another bathroom or bedroom to your starter home can be more feasible than trading up to something larger.
“It is what you make it,” Fernandez said. “If you’re happy and everything is good, sometimes you just don’t feel the need to go and spend another $500,000 or $600,000 for your next home. You just work on spending $100,000 and make your starter home your next home.”
Castro’s house was built in 1959, at the tail end of the post-World War II starter home boom.
“The thing that really signals that this is a starter home is that when you open the front door, bam! You’re right in the living room,” said Elaine Stiles, an architectural historian at Roger Williams University.
A shortage of affordable housing for returning veterans led developers to fun-size the trappings of the middle class into as small a space as possible: a dining alcove instead of a room, an extended roofline over the front door instead of a porch.
While the size of single-family starter homes started creeping up in the late 1950s, their smaller footprint allowed cheaper prices. A 1959 newspaper ad for Castro’s model listed the brand-new property for just $10,750 — equivalent to around $112,000 today.
Cheap mortgages from the federal government made that even more affordable to first-time buyers. But redlining, racist federal housing policies and other forms of discrimination made it much more difficult for minorities and people of color to start their way up the homeownership ladder.
“Latinos, Asians, in some cases people who are of the Jewish faith, and African Americans don’t have access, equal access, to any of this,” Stiles said.
But for working-class white families, starter homes were a major step in creating upward mobility and building generational wealth. “You start small and work your way up,” she said.
Starter home renaissance in rural Delaware?
What does “starter home” even mean today?
“It’s almost like the starter home is gone,” said Jenni Nichols, who follows new home trends at John Burns Research & Consulting.
Builders have a hard time making money on small homes because land, materials and labor cost so much more today, Nichols said. “Then you run into, ‘OK, if I, if I build something small, I still have to charge too much for it.'”
Some builders are trying to meet demand for entry-level housing, though. There’s a brand-new development in rural Delaware called Hamlet of Tillery, where sales agent Sasha Greenly wants to have a Renaissance-themed grand opening this spring.
The smallest model, called the Acclaim, looks like a modern version of the classic starter home. It’s a small, white house with a blue door and shutters framing the single front window. At 1,300 square feet, with three bedrooms and two bathrooms, it’s larger than Castro’s home in San Jose. But by today’s standards, it’s small. The median size of a new house at the end of 2023, according to the National Association of Home Builders, was 2,156 square feet.
The list price, $331,990, is also relatively low for new construction. The median price of a new single-family home in January was $420,700, according to U.S. Census data. Greenly said homebuyers are unlikely to find a new detached single-family home for much less around here, especially with all the trappings buyers expect today.
“You’re getting the two-car garage. You’re getting the primary suite with an en suite and a walk-in closet, the large open-concept kitchen and living room and dining area,” she said.
Walking around the house, you can see some of the ways the builder has kept costs down. Vinyl flooring instead of wood. Hollow interior doors. But the big reason these houses are more affordable is their location. Land is cheaper out in the country.
Caitlin McKenzie bought one of the Hamlet of Tillery houses in August with her fiance, Nestor Gonzalez. They had been looking closer to town for a year.
“We were almost worried, like, ‘Oh, we’re in the middle of nowhere. Is this going to be OK?'” she said.
They’re in their mid-20s. She manages a pediatric dental office. He works at Verizon. They definitely see this as their starter home. Gonzalez said they hope to eventually “move into something else, and use this as, like, a rental property or something.”
They feel like they got into a home just in time. Prices have gone up since they moved in. The model they bought is called the Triumph, which describes how it feels to actually land a starter home these days.
“Everything’s filling up so fast,” Gonzalez said. “The next couple years, there’s not going to be anywhere for sale anymore.”
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