Traditionally, when couples get married, they purchase their very first home together at the same time. These so-called “starter homes” have historically been inexpensive, allowing young couples to become accustomed to home ownership before moving on to a larger residence once they get better jobs or have children.
However, with the U.S. housing market heating up fast — and home prices steadily on the rise everywhere from San Jose, CA to Wellesley, MA — it appears that the starter home might finally be a long-gone relic of the past.
According to an August 17 WCPO article, today’s home builders are constructing two types of homes: deluxe, luxury dwellings with mansion-like proportions and granite counter tops, or homes meant for families on government subsidies.
As a result, there are few, if any, feasible housing alternatives for first-time home buyers in the middle class. Families who earn the median household income of $50,000 per year are increasingly hard-pressed to find a new home for the recommended price of $125,000. Basically, there are homes for the rich, and homes for the poor — with nothing in between.
This trend isn’t all the builders’ fault, however. Due to increases in labor and material costs, home builders can’t turn a profit on a new home costing less than $200,000, unless the house is built on very cheap land.
Even then, there are barely any $200,000 homes on the market. In 2014, just 46,000 homes at this price point sold across the country, DailyFinance.com reported.
So, for the time being, most middle-class families looking for a starter home will have to rent — or purchase an older, smaller home needing expensive upgrades.