Whatever Happened to the Starter Home?

[Nevilledog]

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M. Nolan Gray
@mnolangray
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US cities used to provide an all-you-can-eat buffet of starter home typologies: shotgun houses, cottage courts, townhouses, duplexes...and then zoning made many of them illegal. I provide comment today in the @nytimes:

nytimes.com
Whatever Happened to the Starter Home?
The economics of the housing market, and the local rules that shape it, have squeezed out entry-level homes.
10:07 AM · Sep 25, 2022 from Los Angeles, CA

https://www.nytimes.com/2022/09/25/upshot/starter-home-prices.html

No paywall
https://archive.ph/h7GWh

As recently as the 1990s, when Jason Nageli started off, the home-building industry was still constructing what real-estate ads would brightly call the “starter home.” In the Denver area, he sold newly built two-story houses with three bedrooms in 1,400 square feet or less.
The price: $99,000 to $125,000, or around $200,000 in today’s dollars.

That house would be in tremendous demand today. But few builders construct anything like it anymore. And you couldn’t buy those Denver area homes built 25 years ago at an entry-level price today, either. They go for half a million dollars.

The disappearance of such affordable homes is central to the American housing crisis. The nation has a deepening shortage of housing. But, more specifically, there isn’t enough of this housing: small, no-frills homes that would give a family new to the country or a young couple with student debt a foothold to build equity.

The affordable end of the market has been squeezed from every side. Land costs have risen steeply in booming parts of the country. Construction materials and government fees have become more expensive. And communities nationwide are far more prescriptive today than decades ago about what housing should look like and how big it must be. Some ban vinyl siding. Others require two-car garages. Nearly all make it difficult to build the kind of home that could sell for $200,000 today.

*snip*

[SheltieLover]

1. Foreign investors are buying them all. I get several calls per week.

[onecaliberal]

2. Housing has become unaffordable. Thank a repuke.

Now investors are buying up houses, in yet another attempt at fucking over the poor.

[kimbutgar]

3. Construction costs have become obscene

i wanted to build a room addition onto an existing roof and was told it would cost me $700,000 and I broight my home for $260,000! I won’t be building on that addition

[Ocelot II]

4. I'm living in one. It wouldn't have been called that when it was built in 1885;

in those days it was just a small farmhouse - it has probably less than 1,000 total square feet. If I were to sell it, it would probably be torn down and a mcmansion would be built on the lot, which is actually 1-1/2 lots. But they'll have to drag my old ass out of here. I like the place.

[doc03]

16. I live in one myself about 1000 square feet built in

1943. It is perfect for me 2br, LR, kitchen and 1 bath. I have a level 1/2 acre lot and a garage in the basement. I could afford a bigger newer place but this is perfect for me. My insurance says the replacement cost is $200,000.
I don't remember the exact figures but I read the average house in the 60s was about 1400 square feet. Now we have smaller families and the average house is around 2500 square feet. I grew up with two brothers in a 1400 square foot home. They don't build them anymore, now all the new ones built are 2 story 2500 +. A friend mine's son built a 1400 square foot home a couple years ago he said he had $300k in it.

[Sympthsical]

5. They started costing half a million dollars

There was this one house by my old apartment in the Bay Area. One bedroom, one bathroom. It had a single driveway. The "yard" was basically a patio behind a fence.

$400,000.

And that was maybe five years ago. I have no idea what it might be now. It wasn't in the city or Silicon Valley. Just a suburb. The only reason partner and I were able to ultimately buy our house was 1. We were both 40+ with savings - being DINKs makes it a bit easier. 2. We moved farther out to a more rural/suburban area in North Bay. And 3. We bought literally right before values skyrocketed 40% in two years. Our valuation has come down a tiny bit with the interest rate increases, but we're still way, way, way above where we bought almost three years ago.

There is just no. way. someone in their 20s or even 30s is buying a house anywhere near me unless they are making bank. No way at all. I'm in my early 40s, and I'm one of the youngest owners in my neighborhood.

[Sky Jewels]

13. In the Bay Area, it's hard to buy a home even with two very high incomes.

Same with Seattle and many other cities.

I think many of the younger people who swing it do so because they've been gifted or have inherited $$$ from Boomer parents.

[bucolic_frolic]

6. I could put one in every bedroom

might be the only way to pay the bills.

[Elessar Zappa]

7. I live in one that was built in 1928.

I never see new construction of small homes. It’s a shame.

[llmart]

8. +1

The zoning laws in many suburbs and other areas often won't allow a small house to be built. I happen to like small houses, but when I wanted to buy I couldn't find an older home that was once considered a starter home that was in good condition. The ones I looked at needed so much work, that it wasn't worth it.

On the other hand, there are an awful lot of people who can't envision living in a 1400 sq. ft. house, even if there are only two of them.

[Samrob]

33. Designed to keep certain people out without being subjected to lawsuits. nt

[JHB]

9. "government fees have become more expensive"

Fees are up because they've become a local income source that's politically cheap to raise instead of raising taxes. Thanks Republicans.

[MichMan]

26. Are fees significantly higher in red areas?

[Sky Jewels]

10. Today, big corporate real estate investors snatch everything up and jack up the costs for everyone.

We need major regulatory oversight and reform. Young people can't afford to pay rent, let alone buy their own houses.

[Mr. Ected]

11. It's not just zoning and foreign investors

Developers want to make as much as they can so they build the largest structures imaginable on the smallest lots they can find.

Greed is the culprit. Goodbye starter homes, goodbye middle class.

[no_hypocrisy]

12. My friends bought a hellhole of a house in 1990.

$48,000.

The interiors were shot. Allegedly the prior owners were into drugs.

And to his credit, my friend worked on that house regularly until it was comfortable, safe, and very nice.

He sold it for $300,000 in 2004.

[GoCubsGo]

19. That sounds a little bit like my neighborhood.

It's all "starter homes" of various ages and sizes. I live in the newer section, which is mostly 3 BR, most with 1-2 car garage homes, around 1300-1400 sq ft., built in the late 1980s-mid 1990s, most kept up fairly well. In 2000, they went for $85-90K. They're nearly double that now. There's also a section of 1950s 2 BR, no garage homes. A lot of them are run-down, with a former meth house among them. In 2000 you could get one for around $30K. I just saw a FSBO asking $120K, and this wasn't even one of the several that were bought up and either renovated, or torn down and rebuilt. I have a feeling that a lot of them will wind up as rentals.

Any new construction in this area is 2000 sq.ft or larger, >$200,000. Anyone looking for a starter home has to go with older construction.

[MissB]

32. Dh bought a lovely home in 1989

It was a rental, but had really good bones (built in the early 1900s with 1800-sq ft and with tons of old dark woodwork like box beam ceilings). He paid $56k.

We remodeled it over the years, sold it for 365-ish in 2003. It sold again last year for a bit under $900k.

Crazy.

That was a middle class home in a middle class neighborhood. The neighborhood hasn’t changed, but the houses are much more expensive.

[no_hypocrisy]

40. IMO, it's not so much the houses are much more expensive.

It's the land under the houses that is much more expensive.

[Hermit-The-Prog]

14. Greed, McMansions, obsolete construction methods.

[Carlitos Brigante]

15. K&R! nt

[Skittles]

17. OMG THANK YOU

WTF is up with all these HUGE, HIDEOUS HOUSES

"lack of affordable housing" is due in part because people think that 3000+ square feet is NORMAL now

[jimfields33]

24. Places like San Francisco, Boston, New York City and many other cities

Are not near McMansion version and they are sky high and prices. Heck you can build a McMansion and Iowa for 400 grand probably. Couldn’t get 1000 square-foot home for that in San Francisco.

[rickford66]

18. My starter home was an $8,000 converted one-room schoolhouse on 1/3 acre.

I did some fixin' up and sold it for $20,000 several years later. That's what I thought "starter home" meant.

[dweller]

20. I believe it has been replaced

with the Tiny Home …


✌🏻

[FakeNoose]

21. Look in the inner cities, starter homes are still there and they are affordable

I live in the city limits of Pittsburgh where no "new" housing has been built for over 50 years, maybe longer. I live on a nice quiet residential street of older homes, and my neighbors are approximately 50% white and 50% black. As a single woman I would not have qualified for a mortgage for a sleek new suburban home, even though I had a secure job with benefits. The suburban house buyers are all two-earner families, with a few kids etc. That wasn't me.

I purchased this older house 25 years ago because the Fanny Mae mortgages were making it possible. Over the years I've been making small improvements, maintaining the value of the property and now my mortgage is only a few years from being paid off.

The question is, how many younger couples who grew up in the suburbs are willing to look inside the city limits? Not many I'm afraid. They want to move further and further out, most of them. Maybe they are afraid to come in. But that's what our cities need, and that's how we can regenerate our city populations. Even now I see houses that are available fixer-uppers and would take a lot of time and sweat equity, but the payoff is there. These are houses that you must find on your own, or by word of mouth. You won't be shown these "bargain" houses by the real estate agents. They just want you to see suburban big-ticket properties where they make the nice commissions.

Bargain fixer-uppers are the ones you find on your own, by driving through the residential city streets and asking around. "For Sale By Owner" signs are your friend.

[jimfields33]

25. The young couples would come if it was safe

But inner cities are dangerous and who wants to walk down the street and have the potential of getting mugged or worse. It’s much safer to go an hour outside the city and build a house and be able to walk everywhere and do what you want. I’m just saying.

[Elessar Zappa]

27. I think what the poster means by inner city

is housing within the actual city limits. And yes, there’s plenty of safe city neighborhoods.

[NowISeetheLight]

28. So True

I read an article this morning (CNN) about “Murderapolis”. I talked about crime especially in N. Minneapolis. The article focused on the post George Floyd issues but the reality is they were bad back in the 80s. I remember my Dad telling me to stay out of the city. The gangs from Chicago were moving in and bringing the chaos with them. You couldn’t pay me to live there now.

[Ocelot II]

30. I live in Minneapolis, well within the city limits. Reports are exaggerated.

The North Side is still an area I'd mostly stay out of, but the whole city is being made out to be another Fallujah, and it isn't. Car theft and garage break-ins are up from a few years ago, but down from last year. I don't feel unsafe in my neighborhood.

[FakeNoose]

31. I walk around my city neighborhoods all the time

Never been mugged, never been threatened. One neighbor had his car broken into about 20 years ago, but he had some expensive radio in there. That's the only break-in I've heard of. Mostly it's peaceful, friendly and safe in the city limits.

When white people go around telling each other how "unsafe" the cities are, that's why they're scared and won't ever consider living there. I'm white and I grew up in the suburbs. Consider that your preconceived notions might be holding you back.

Just sayin'

[JanMichael]

36. It isn't New Jack City in every downtown.

Most of my adult life has been spent in or adjacent to mid sized city downtowns. Never been mugged. Had a car breakin but there wasn't anything in it to steal so they placed my Rage Against the Machine CD next to my John Denver CD on the passenger seat.

Ironic thieves?

[dsc]

22. I literally live in one

1404 square feet, 3 bedrooms, 2.5 baths, one car garage, 0.24 acre, built 2022 for 192,400

[Chainfire]

23. My first home, purchased in about 1975, was about 800 sq. ft. two beds and one bath and a car port.

$15,000 dollars. It was plenty big for a newly married couple who didn't own squat. I believe that the payments were less than one weeks wages for an apprentice plumber. I sold it three years later for $24.000, bought a house twice as big. You can blame me for the inflation.

[kskiska]

29. My dad bought our 4-room house after WWII

and died in it in 2015, aged 92. That was our "starter home." The term didn't apply back then.

[NickB79]

34. My best friend from college bought 15 with his 3 cousins

Most bought in the burbs of the Twin Cities during the housing crash after 2007 as foreclosures. I was really worried for them at first, because it was a hell of a risk. I've helped him clean, fix and landscape a bunch of them. Now they rent them out and make serious money off of them.

That's the trend I see: starter homes are now rental homes, and houses to buy are new construction.

[CentralMass]

35. They were all bought up and rented or flipped.

[dalton99a]

37. Kick

[Lancero]

38. 3 bed, 1400 sq foot is a starter home?

Part of me suspects that a driving factor for the loss of 'starter homes' is that a lot of people kinda keep expecting more, and more, and more, repeat ad infinitum, out of a 'starter' home.

Remember the old starter homes? You know, 700 sq foot - Sometimes less - and two bedrooms if you're lucky?

Hell, I wouldn't that surprised to find that even those expectations are overblown compared to someones idea of a starter home.

[leftstreet]

39. This isn't 1850

3 bdrm 1400 sq ft is modest in terms of new housing built today. Rich people have 1400 sq ft master suites.

Working class families didn't coin the term "starter home," developers and real estate investment firms did. Lots of people would like to think they can buy enough home to fit their needs for decades.