The Staggering Price of Starter Homes

There was a time, not too long ago, when the term “starter home” implied something modest. Modest square footage, modest finishes, modest price tag. A manageable first step into the world of homeownership.

Not anymore.

Today, in many cities and high-demand suburbs across the U.S., the so-called “starter home” has crossed into seven-figure territory. That’s right: $1 million - or more, for a basic three-bed, two-bath home that hasn’t been updated since the early 2000s.

The New Normal?

In places like San Francisco, Los Angeles, parts of New York, Boston, Seattle, and even pockets of Colorado, Austin, and coastal New Jersey, it’s not uncommon to see listings for $1.1M or $1.3M described as “great for first-time buyers!” No, that’s not satire - t’s the current state of the market.

And these aren’t luxury homes. They’re often:

    •    Under 1,500 square feet

    •    On tiny lots

    •    In need of renovations

    •    Located far from city centers or in up-and-coming (read: still transitioning) neighborhoods

Yet they are snapped up quickly, often with multiple offers, cash buyers, and waived contingencies.

Affordability Is No Longer the Baseline

What used to be the stepping stone is now the summit for many. High interest rates, limited inventory, and decades of underbuilding have converged to create a housing environment where even high earners are priced out of what should be entry-level homes.

The median household income simply doesn’t stretch far enough to cover a $6,000+/month mortgage (plus taxes and insurance) without significant savings, outside help, or inherited wealth.

This Isn’t Just a Coastal Problem

While the most extreme sticker shock happens in major metros, the affordability crunch is spreading fast. Mid-tier cities like Boise, Nashville, and Raleigh have seen meteoric price increases that now put even modest homes out of reach for first-time buyers earning local wages.

Why It Matters

The implications are far-reaching:

    •    Fewer first-time buyers means less mobility in the market overall.

    •    Delayed or denied homeownership contributes to the widening wealth gap.

    •    Long-term renters often face escalating rents with no equity gain.

And perhaps most alarming: many younger buyers no longer believe homeownership is attainable at all.

So What Now?

There’s no quick fix, but awareness matters. Policy reform, creative financing, zoning changes, and new construction targeted at actual starter homes are all part of the solution.

In the meantime, buyers must balance realism with strategy. While the $1M starter home is sadly real in many areas, there are still smart ways to get into the market, with expert guidance, patience, and a clear plan.

Because if this trend continues unchecked, the term “starter home” may soon be extinct.