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The Disappearing Starter Home: Challenges and Successes for First-Time Buyers

Tuesday, February 4, 2025   /   by Bell Home Team

The Disappearing Starter Home: Challenges and Successes for First-Time Buyers

For generations, the idea of a "starter home"—a modest, affordable first step into homeownership—has been a cornerstone of the American dream. Typically smaller, more budget-friendly homes, they provided young adults and new families with a foothold in the market. However, in recent years, the number of available starter homes has drastically declined, making it more challenging for first-time buyers to enter the market.

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What’s Happening to Starter Homes?

Across the U.S., the supply of entry-level homes has shrunk due to a combination of rising home prices, high construction costs, and increased demand. According to Census Bureau data, the number of new homes under 1,400 square feet—often considered a "starter home" size—made up just 8% of new single-family home construction in 2022, compared to nearly 40% in the 1980s. At the same time, home prices have risen significantly, with many once-affordable properties now out of reach for the typical first-time buyer.

The shift has also changed buyer behavior. The median age of first-time homebuyers has climbed to 36, compared to 33 just a few years ago. Many young adults are entering the housing market later in life—often with growing families or higher expectations for what they want in a home.

Rising Prices and Limited Inventory

The surge in home prices has significantly outpaced income growth, placing starter homes out of reach for many. A study by Zillow revealed that the number of U.S. cities with entry-level homes valued at $1 million or more has nearly tripled since 2019, jumping from 84 to 237 cities. California leads with 117 such cities, followed by New York with 31.

Additionally, the U.S. faces a substantial housing shortage, with approximately 30 renters vying for each available home for sale, a sharp increase from less than 10 in 2006. This scarcity is partly due to a lag in new home construction since the Great Recession, resulting in a deficit of at least 1.5 million homes.

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The Housing Market in Onondaga County

Locally, the real estate market reflects these national trends. The median home listing price in Onondaga County reached approximately $289,900 in late 2024, a significant increase from prior years. Similarly, homes are selling faster, with the average time on market hovering around 24 days—meaning buyers must act quickly when they find a home they love. While interest rates remain higher than in previous years and home prices continue to climb, the process can seem daunting. However, many first-time buyers are still successfully navigating the market.

Breaking Into the Market: A Success Story

Despite these challenges, first-time homebuyers are still finding success. Many are adjusting their home-buying strategies—expanding their search radius, considering townhomes or condos, and being flexible on must-have features. Buyers who plan ahead, work with knowledgeable real estate professionals, and remain patient are seeing their dreams of homeownership come true.

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A Positive Outlook for First-Time Buyers

While the days of easily finding a low-cost starter home may be changing, the real estate market still offers opportunities for those willing to adapt. With careful planning, strategic decision-making, and the right guidance, first-time buyers can break into the market and secure a home that fits their needs. At BELL Home Team, we've helped many first-time buyers navigate this competitive market and successfully purchase their first homes. The journey might look different than it did decades ago, but homeownership is still within reach for those who are ready to take the leap.

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