Home 2.0 Blog Archive

Monday, February 16, 2015


Is the new starter home on a fast path to extinction?

A recent article in Builder Magazine titled 'The Rise and Fall of the Entry-Level Home: Is the lowest tiered new-home on a fast path to extinction?' Poses the question, is the new "starter" home history? 

Reminiscing of the past when Entry-level was the "there" that many people worked and worried and dreamed of getting. The article points to new entry-level, starter homes being so scarce right now, that if not extinct, they are at least an endangered species, with three big forces making this a plausible idea, Lots, Fees and Preference.

Lots: The lots that have sold and been brought into service during the first part of the recovery in the past 30 months or so have mostly been finished lots of "A" quality, with relatively little attention being paid to B and C and D lots that need development and marketing. 

Fees: Sticker shock for would-be new, starter home buyers comes from local entitlement and permit fees that effectively "ward off" entry-level neighborhoods from already established communities. Fees and charges that get baked into the price of a new home can add 20% to 25% of the cost of a new home, all in the name of underwriting new infrastructure and schools and expanded support services.

Preference: Many of today's typical "entry-level" candidates don't want an "entry-level" or "starter" home. They've waited longer to form households, pay down student debt, hook up with significant others, and amass their "ability to repay" profile, and now they're not going to settle for a mere deed that gets them a ticket out of monthly rental payments.

Builder Magazine wraps up the article suggesting that millennials' that wait for homeownership may fundamentally change what the first-time buy is all about. They may not—in a general way—ascribe to typical "starter" home purchase as a stepping stone toward a more permanent family residence. Concluding the starter home may, in fact, be dead.

Starter Home 2.0 Takeaway: Comparing the new entry-level starter home mentioned in the article to the Starter Home 2.0 is like comparing apples and oranges. The big 3 forces driving the downfall of traditional new starter homes, are of no consequence to the success of the Starter Home 2.0 project. The scattered site infill lots on which Starter Home 2.0 projects are built require no new infrastructure development to be brought into service, which means no unnecessary fees and no unnecessary charges. Starter Home 2.0 projects are also designed to accommodate the preferences of a family looking to go beyond a stepping stone house, towards a more permanent family residence with the amount of beds, baths and usable living space provided. So don't let the name full you, the Starter Home 2.0 project has all the sustainable drivers be thriving, not dying in the years to come.