Market Data + Trends

Sidestepping Starter Homes

The real estate market is increasingly pricing out many Americans from homeownership, particularly Millennial buyer hopefuls.
April 9, 2019

The real estate market is increasingly pricing out many Americans from homeownership, particularly Millennial buyer hopefuls.

As a result, Millennials are renting their homes longer, and therefore saving up longer to afford to buy a home. Once they do buy at that later time, Millennials are looking for higher-end homes, according to Business Insider. Spencer Rascoff, Zillow's CEO, says "Many people are basically skipping starter homes; they're renting until their 30s ... and they just are not even buying the $200,000, $300,000, $400,000 home, which is a total mind shift as compared with previous generations. So they're still buying homes — they're just buying them later and buying them bigger."

First-time homebuyers needed 23 percent of their income to afford an entry-level home in the second quarter of 2018, an increase of 2 percentage points from the previous year, according to The Real Deal. Last May, the median price of previously owned homes was $264,800, the most expensive it'd been in a decade.

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