No one is building starter homes any more.
I'm surprised I don't see this discussed more often. My generation despairs of the American dream of home ownership, and the lack of real starter homes is a significant piece of that puzzle.
Discussion
No one's building them anymore because fewer people nowadays earn enough capital to aquire the overpriced resources that are needed to build the home.
I'm not sure that answers why the housing developers aren't building starter homes.
New developments are full of boxy, 2-story cookie-cutter homes that put as much interior square footage on a lot as possible without regard for anything else. Because they're so big, they're all priced well above what the first-time home buyer can afford.
The single-story, modest homes that my generation's parents bought as their first are now in desirable suburbs and cost obscene amounts of money. Rich folks just buy those and tear them down to build McMansions in their place.
Local building laws + screaming high interest rates for new construction = no one i knew doing that is doing it anymore.
https://youtu.be/n_VjuNwlGQI?si=ev8rcxIiGX_t2ZE_
For the average joe we price out just with a 3.5% down payment we priced out on 800k home thats 28k i woukd rather buy a whole coin and rent and make all the bills your problem 😉
It's a symptom of the current banking system. Things for which loans are made (homes, autos, schooling, etc.) are artificially price-hiked.
The interest is lower and payback is slower in a fractional reserve paradigm, but people afford payments not interest rates. This causes the total price to go way up, but the monthly remains what they might afford. Later, after turning homes into business investments and boostingthe prices, the down payment just becomes too much. Even the advent of the 3.5% down causes the total to rise for the same reason.
Fractional reserve isn't possible with hard money, so bitcoin will also fix housing costs.
That makes sense.
Though I'm not sure the subdivision homes being built are artificially price-hiked, entirely. They're just built as homes for families with 2 or 3 kids, 2 cars, and a dog. A family in their 20s just starting out is straight outta luck, because no one is building modest-sized homes for them. If they were, those homes would probably be at least somewhat more affordable than what is on the current market.
I think that is also a subsequent symptom. Twenty-something newlyweds are less likely to afford the down, so the demand feels to the markets artificially low. This causes a new-build supply correction. No one makes modestly sized housing because the money is in mid-sized single family homes, multi-plexes, or apartments. Maximize the size of home you can fun on a lot, and your lot ROI is better as a housing developer. Too small and you'd be better to double up on a lot and make a duplex or quadplex.
If you want a modest house, you'd be best off with a trailer and a little land in the country. Plus, with remote work being what it is nowadays, that's really a great option.
An example:
My parents married in 1995. They were in their mid-20s. My dad was the primary breadwinner, and my mom worked part-time until they had kids. Within 3 years of getting married, they were able to buy a modest, 1500 square foot home in a quiet suburb of San Diego for around $150,000.
My wife and I got married in 2021. I'm the primary breadwinner, and my wife works part-time. By raw numbers, our income is similar to my parents' at the same stage of their lives. However, compared to when my parents got married, the dollar has lost half it's value due to inflation, and the price of a comparable home has doubled. Homes in the neighborhood my parents first bought in often run north of $1,000,000 today.
Buying that starter home is possible for us, but it requires a tighter budget than it did for our parents to save enough for the down payment. And we are hard-pressed to find comparable, modest-sized starter homes in our city. The current suburbs are full of boxy, two-story monstrosities that start at $450,000.
Many of the people I know today in the same situation are rather despairing over the barrier to entry for home ownership. The situation just sucks all around.