Definition
An affordable entry-level residential property designed for first-time homebuyers, typically smaller and less expensive than median homes.
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Starter homes are the first owned home for buyers, typically smaller, less expensive, and with fewer amenities than move-up homes. Usually 1,000-2,000 square feet with 2-3 bedrooms. Starter homes may require updates or renovation. Located in accessible neighborhoods often farther from job centers. Pricing is designed for entry-level affordability. Many first-time buyers qualify for assistance programs for starter homes. Market conditions affect starter home availability and affordability. Builders focus on starter home developments for volume and market share. Starter homes build equity for eventual move-up to larger properties.
Pro Tip
Consider starter homes as equity-building investments before moving up to larger properties.
Example
A starter home was a 1,600 square foot, 3-bedroom townhome priced at $250,000 for first-time buyers.