The Death of the Starter Home?

[OfTheCross]

The Death of the Starter Home?

Homebuilders aren’t making new houses that sell for $200k or under anymore. Thus, the starter home is dead.

At first glance, it would be hard to argue with this conclusion. After looking under the hood, my conclusion is somewhat more mixed.

I decided to dig through the numbers myself with some help from Federal Reserve data.

This is the proportion of new houses sold in the United States going back to 2002 broken out by various price points:

New home sales at $200k and under were as high as 60% of total new houses sold in 2002 at one point. In July of this year, that cohort accounted for just 2% of new home sales. New homes of half a million dollars and up were just 3% of sales in 2002 but nearly 30% in June of this year.

There is an obvious trend of new homes being built at higher price points.

There are a few explanations for this trend....

 

[OfTheCross]

to keep this in perspective, though...$150k in the year 2000 is $232k now.

So, starter homes aren't actually dead if we account for inflation.

That is, of course, unless wages haven't kept up

 

[Mike Nasty]

When has anyone buying their first house needed it to be a new home?

 

[Hood Critic]

When has anyone buying their first house needed it to be a new home?

I agree, most new home buyers are not buying new builds.

 

[OfTheCross]

When has anyone buying their first house needed it to be a new home?

I don't disagree. But it's not uncommon.

I wonder how prevalent the idea of "starter homes" is, though...I thought most people just bought one place and stayed forever.

 

[BillBanneker]

When has anyone buying their first house needed it to be a new home?

It def happens in some suburban areas and smaller cities but new construction is largely unaffordable now in more established metro areas.

The lack of “starter homes” just illustrate the lack of housing being built in general being a massive issue.

 

[Hood Critic]

I don't disagree. But it's not uncommon.

I wonder how prevalent the idea of "starter homes" is, though...I thought most people just bought one place and stayed forever.

Depends on the area but bigger cities people average 6-10 years in a home. The house we just bought was built in 2007 and we're the 3rd owners of it and will probably move in that 6-10 year mark. That probably has a lot to do with taking advantage of the inflated appreciation values.

 

[GnauzBookOfRhymes]

We are just now finally getting over the oversupply/glut of homes built during the housing bubble of the early/mid 2000s.

 

[dora_da_destroyer]

I don't disagree. But it's not uncommon.

I wonder how prevalent the idea of "starter homes" is, though...I thought most people just bought one place and stayed forever.

The starter home is how boomers acquired so much real estate, gen x to an extent as well. People used to have starter homes for when they were married with 0-1 kids, as they had more kids and progressed in their careers, they’d trade up to a bigger/better home

now in most metro areas, you need 500k+ to buy even a condo/townhome that comes laden with HOA fees, SFH’s are at an even higher premium. This has resulted in what we see with millennials - people/couples not buying their first home until 35+ and yes, it’s a forever home at that point given the high cost, late buying age, and the rapid appreciation of houses in some areas where wages cannot keep up - the bay in particular, just thinking of how you needed 400-600k to buy a home on my block in 2015 and 5 years later you needed 800k-1.2M - salaried haven't 2x’d in that time, it’s simply the highest earning that can now buy homes. These are 800-1500sq ft, 2-3bd 1ba houses which used to be starter homes that are now permanent homes since they cost so much.

 

[BillBanneker]

We are just now finally getting over the oversupply/glut of homes built during the housing bubble of the early/mid 2000s.

This isn’t necessarily true. There’s a massive housing shortage and has been for a while. Also, “starter homes” being built has been in decline since the 90s.

 

[88m3]

probably isn't a bad thing, I'm sure it's horrible for the environment

 

[Geek Nasty]

Starter homes usually are older homes. I see upper middleclass people follow this ownership track:

1. Maybe buy small house/condo out of college 2-3 bdrn.
   
2. Get married buy 1st or second house
3. Start having kids then upgrade house
4. Either downgrade after kids move out or move to country
5. Retire and move to senior living facility

So they might go through 5 houses/condos in a lifetime

 

[Conan]

probably isn't a bad thing, I'm sure it's horrible for the environment

How?

 

[dora_da_destroyer]

Starter homes usually are older homes. I see upper middleclass people follow this ownership track:

1. Maybe buy small house/condo out of college 2-3 bdrn.
   
2. Get married buy 1st or second house
3. Start having kids then upgrade house
4. Either downgrade after kids move out or move to country
5. Retire and move to senior living facility

So they might go through 5 houses/condos in a lifetime

i'd disagree, this doesn't look like what the buying pattern looks like now...upper middle class are usually concentrated in urban areas where the norm is renting until marriage which is 28-40 yrs old, and coincides with them buying a forever (priced) home - you see a million questions now about school districts, taxes, etc because people are buying for the long haul, they're not buying starter homes where they can move in 5-6 years when their kid is ready to go to school. occasionally you'll have a single or couple with a condo or townhome they hang onto, the smart buyer might get a multifamily that they can hang onto once they move to a SFH, but for those who do move, most people are still buying another forever home just in a new area (moved back home closer to family, new job, finally ready for suburbs, etc). that starter - upgrade cycle is dead for most folks since it takes so long to save for the first purchase

 

[88m3]

How?

what do you mean how? are you serious or a just a troll?