The Myth of the "Starter Home"
The “starter home” is a term used by real estate influencers and advice-giving homeowners of a different generation, and is often accompanied by themes of fiscal responsibility, and not “biting off more than you can chew”, financially speaking.
“Buy a starter home when you’re young, and then move up when you’re ready”, someone giving advice might tell you. Except this advice - this whole way of thinking - is legacy advice from a bygone era.
A starter home is usually understood as being a small, financially accessible house (usually a single-family detached house, but not necessarily), that a younger person or a couple would move into as they continue to save, make career gains, and move up in the world, until they outgrow such a house, and move into a bigger one.
But this advice no longer applies to modern housing markets. In fact, it no longer even applies to younger people. The presuppositions of this concept are all but forgotten.
The “Starter Home”, being a small post-WWII GI home (sometimes called a Monopoly Home, after the plastic game piece), is a real estate meme that only existed for two generations. Before the Baby Boomers and Silent Generation, those homes didn’t exist. People lived in apartments or row homes, or they lived rurally, in bigger houses, reflecting the empty nature of their setting.
Such a concept only reflects a reality that existed for less than 50 years, and required a period of unprecedented post-war economic prosperity that the US will never see again. We will never see it again, because we likely will never have the opportunity to spur the war machine to such new heights, nor would we get to loot Europe, again.
The starter home, a 2 bedroom, 1 bathroom (typically) single family, detached house, complete with a legally-required lawn, built in the outer reaches of any American city, and sold, typically, to returning WWII G.I.s, is still fairly common in most American towns. But they were short-lived. What replaces them now is single family, detached, setback McMansions in far-flung exurban areas, very far from the economic centers of a city. Or, smaller apartments, built anywhere. The responsible middle ground that the starter home represented is gone.
To create more starter homes, as we understand them from the previous description, is simply geometrically impossible. The entire point of the starter home development pattern, in the post-war period, was to give every returning soldier a little slice of Americana. And coupled with a new burgeoning automobile manufacturing sector, and an Eisenhower-approved Federal Highway Act, these would be built just about a twenty minute drive from anything. Just pop on Route 28, and you’ll be downtown in no time!
Every single place that was within commuting distance to the economically-desirable areas of a city was turned over to starter homes, in one the country’s largest bouts of housing development that it has ever seen. And in the ensuing years after this, these cheap, new, approachable, attainable houses became known as starter homes. They represented about four times the average annual income, and were brand new, in a new, clean, easily transitable area.
But now, most of these areas look pretty similar to how they did 75 years ago. Except these houses represent 10+ years of annual income, and have cracked foundations, and are less navigable due to massively increased traffic. Though still small, they are no longer considered starter homes - they are finisher homes, now.
Many of the neighborhoods that best exemplify the concept have been composed of these monopoly houses for quite literally 75 years at this point. Places like Baker, in Denver, or outer Queens, or everything west of Rock Creek in D.C., or Coral Gables, in Miami. More than 2/3rds of the space on San Francisco’s peninsula. Anywhere that claims a “historic” neighborhood, in the US.
The issue is that while these neighborhoods stayed the same (degraded with time, even), population growth and economic modes have changed drastically. Since 1950, the US has more than doubled in population, which is crazy enough, but made worse considering all the areas immediately outside of our cities are still composed of starter homes. Household size has decreased, average number of children has decreased, immigration has changed, salaries have changed, everything has changed. Except the housing.
Through zoning laws like lot size minimums, lot size utilization, height limits, parking limits, Euclidean zoning, detachment requirements, setback requirements, height limits, ADU bans, and more, these communities have been cast in amber, or such was attempted, while everything around them changed immensely. That is why these starter homes are now worth so much, despite them being old, dumpy, and unmaintained. It is because they were artificially preserved legislatively, typically to ensure that undesirable people groups would not have access to the neighborhoods themselves.
Over the years this was tied thematically to the middle class and constantly lauded by both sides of the American political spectrum. Housing became commodified due to artificial restrictions that prevented more from being built.
To buy a cheaper house, in 2024, you have to live further out - and in most robust cities, that can be pretty far out.
This is because every plot that would serve as a “starter home” batch has already been a suburban development for 50 years already at this point.
The solution to this issue is, like most of my writings indicate, to incentivize infill development and transit oriented development, of mixed and varied configurations, with freedom to do conversions or make ADUs.
The freedom to create three bedroom apartments above grocery stores, six-floors of studio apartments in the shared parking lot that used to be a court yard, carriage houses built wherever it fits. Unfortunately, this practice (that was just the standard development model for literally every single society for all of human history until post-WWII Euclidean zoning became a thing) is largely illegal in most places.
And as a result, most of the most desirable neighborhoods are “grandfathered in” to having this, or grandfathered in to never being allowed to be this.
This is what is meant by the supply-side housing crisis. No more detached, small-footprint, setback single family houses can be built anywhere right now where they would be necessary, as every place where the demand exists has already had this type of housing for decades now.
What is needed to address the current housing crisis and the current affordability crisis is to build multifamily housing in the places where these starter homes are, and build starter homes where the far-flung McMansion suburbs are. This is what would have happened, would it have been legal for it to. This is also why most of the new greenfield development (which is uniformly suburban) is in a place where there is no demand to live, except that is allows homeownership, regardless of the commute. Then, for the purposes of padding developer profit margins, these houses are built bigger and with worse materials, leading perfectly to the McMansion as we know it today. Quite a distant cousin to the starter home, right? And little in the way of resemblance.
Its geometry. That is all it is. Discourse surrounding starter homes, from the perspective of pre-1980s, simply does not make sense, geometrically.
The “starter house” meme requires so much liquidity and for the market to be so alien to what we currently have.
If you buy a starter house at 23, you’d expect your income to go up by 30, 35 years of age. The goal would be to have a larger house that you could raise more kids in (which is where the meme comes from - as a starter home implies an opposite finisher home).
But 20-something’s can’t afford most houses, largely. And salaries don’t increase with age as much as they used to. People are having less kids, an issue that requires its own explanatory blog post, and is also attributable to the issues I described earlier. And the cost of having a kid has increased astronomically, again attributably to the housing crisis.
Master-planned neighborhoods are weak, and they are not resilient. They use legal zoning ordinance to prevent change - even natural change, typical of a 50-75 year interval - in order to enshrine a perpetually rising house valuation, comorbid with the commodification of housing.