{"id":226401,"date":"2022-10-26T12:15:48","date_gmt":"2022-10-26T16:15:48","guid":{"rendered":"https:\/\/www.livabl.com\/articles\/?p=226401"},"modified":"2022-10-28T08:42:01","modified_gmt":"2022-10-28T12:42:01","slug":"starter-homes-american-cities","status":"publish","type":"post","link":"https:\/\/www.livabl.com\/articles\/news\/starter-homes-american-cities","title":{"rendered":"Where did all the starter homes go?"},"content":{"rendered":"

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If you\u2019re looking to buy your first house but can\u2019t seem to find any affordable options, you\u2019re not alone.<\/p>\n

Starter homes \u2013 single-family homes with 1,400 square feet or less \u2013 used to be a popular option for first-time homeowners in previous decades. In the 1940\u2019s, starter homes were listed for around $6,990 and made up nearly 70 percent of all new builds. By the 80\u2019s, that number dropped to about 40 percent.<\/p>\n

These days, starter homes seem to have disappeared from the market entirely.<\/p>\n

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Increased cost of land, zoning restrictions and inflation have driven the traditional starter home to near extinction. Today\u2019s starter homes aren\u2019t the intentionally affordable family homes of the past \u2013 they\u2019re simply the cheapest homes on the market, which complicates matters for renters and young families who now need to compete against downsizers and property investors.<\/p>\n

For many aspiring homeowners, entering the market feels impossible. Attainable homes are scarce and trying to buy one means facing off against experienced buyers with more money behind them. On top of that, rapidly rising interest rates mean many first-time buyers can\u2019t get approved for a mortgage that costs the same amount as their rent.<\/p>\n

It\u2019s dreary picture for many American renters \u2013 but how bad is it, really?<\/p>\n

To get a better idea of how the situation looks across the country, Point2<\/a> reviewed data on the median price of a starter home and renter household\u2019s median incomes in the 50 largest US cities.<\/p>\n

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California renters can only dream of homeownership <\/strong><\/p>\n

If you\u2019re going to San Francisco, be sure to wear some flowers in your hair\u2026 but maybe don\u2019t have your heart set on buying a house any time soon.<\/p>\n

Average renter households in the city make $100,715 per year, which may seem like a livable income in many other areas \u2013 that is, until you realize first-time buyers in San Francisco would need to make $251,190 per year in order to comfortably afford a mortgage payment.<\/p>\n

That\u2019s a 60 percent gap between the median renter income and the income required to afford the cheapest homes in the San Francisco market.<\/p>\n

While San Francisco is at the top of the list for unaffordability, California seems to have the greatest concentration of unaffordable cities overall.<\/p>\n

Renters in Los Angeles and San Jose are also more than $100,000 short of making their dreams of homeownership come true. Long Beach, San Diego, Fresno and Sacramento offer a slightly better picture, but renters in those cities would still need to increase their income by over 50 percent in order to afford a home.<\/p>\n

If you\u2019re more of an East Coast person, don\u2019t get your hopes up for New York, either. While it\u2019s not as bad as San Francisco, renters in the Big Apple make less than half the income required to purchase the average New York starter home.<\/p>\n

Affordability windows are closing quickly<\/strong><\/p>\n

A lot can change in a month, especially when it comes to real estate.<\/p>\n

Affordable cities are becoming unaffordable seemingly overnight, leaving renters who straddle the affordability line in a constant state of limbo. Should they renew their lease for another year, or make the switch to homeownership? The pace at which affordability windows are closing leaves many without a clear answer.<\/p>\n

So, what exactly can happen in a month?<\/p>\n

Interest rates can make or break your ability to buy a house. So far, they seem to be the cause of growing unaffordability.<\/p>\n

In August, when interest rates hovered around 5.5 percent, renters in six large U.S. cities could afford to buy a starter home:<\/p>\n