flexiblefullpage
Currently Reading

The Demise of the Starter Home—Here’s Why They’re Being Replaced

Advertisement
billboard
New-Home Sales

The Demise of the Starter Home—Here’s Why They’re Being Replaced

Rising land costs and shifting buyer preferences are forcing builders to replace entry level homes with larger, more expensive ones


October 11, 2022
Small white entry level home seen from street curb
Image: Stock.adobe.com

Entry level buyers are finding a nationwide shortage of starter homes in a housing market characterized by soaring home prices and much larger residential construction projects. Not only are homeowners renovating existing starter homes to expand their floor plans, but a growing number of home builders are also pulling entry level houses from their portfolios to appeal to a consumer base looking for additional living space, The New York Times reports.

Also, while the value of land has increased significantly over the last several years, zoning rules in many neighborhoods still prevent home builders from creating new multifamily housing. Instead, single-family homes can only be replaced by new single-family homes, and as land gets more expensive, the houses that sit on top of it also get larger and more expensive.

All of these scenes are in relatively desirable locations, within metro areas with good jobs and rising home prices. In these places, the value of land has increased significantly. That might mean a little two-bedroom house that once sat on dirt worth $10,000 is now sitting on dirt worth $200,000. Most families in the market for a small two-bedroom starter home won’t be able to afford it now. And a developer who buys that same small home will need to replace it with a much, much more expensive one to recover the cost of that expensive land.

Read more

Advertisement
leaderboard2

Related Stories

Financing

Mortgage Demand Drops to 27-Year Low

The highest mortgage rates in two decades are causing buyers and prospective sellers to pull back from the housing market

Housing Markets

Florida Is Now the Second Most Valuable US Real Estate Market

Housing markets such as Florida are seeing substantial growth driven by an uptick in new construction

New-Home Sales

New-Home Sales Declined in August Due to High Mortgage Rates, Pricing Pressure

A housing affordability crisis is taking a toll on homebuyer demand and leading to a slowdown in new-home sales

Advertisement
boombox2

Top Articles

Advertisement
boombox1
Advertisement
native1
halfpage2

More in Category

COVID-19 may be easing its grip on the U.S. after a disastrous two years, but lingering supply chain disruptions have builders holding onto their pandemic business tactics

An archive of NHQA-winning companies that represent home building's best in Total Quality Management

Don’t let the current hype about single-family B2R communities obscure the need to create long-term sustainability and asset value

Advertisement
native2
Advertisement
halfpage1

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.