Housing market dynamics have changed. Should You Skip the Starter Home?
Not so long ago, young homebuyers in their 20s or early 30s would buy a smaller, older, cheaper “starter” home with a plan to sell it in a few years for a profit and upgrade into a nicer home. That home, or maybe the next one, would be their “forever” home. Times have changed.
Today, when the average age of a first-time homebuyer is 40 – and homeowners stay in their homes for an average of 11 years before selling – more first-time buyers are skipping that starter home step and moving straight into their forever home. But age and timing don’t tell the whole story.
Savvy homebuyers of every generation now recognize that home value doesn’t depend on the sales price and the square footage. Instead, they realize that disposable houses are worth less by every standard than a home that’s built for high performance: to keep them safe in a storm, warm or cool even during extreme temperature events, and maintain affordability based on long-term metrics including operational costs.
More than 50% of homebuyers of every generation told Green Builder Media’s COGNITION Smart Data researchers that long term value and ongoing operational costs are bigger factors in their homebuying decision than upfront prices and the cost per square foot.
What is a Starter Home Today?
Buyers often think of a starter home as a place that doesn’t fully meet their expectations or hopes for where and how they want to live for the long-term. A starter home can refer to a home in a less desirable location, condition or size, but typically today it’s also defined by price. Nationally, the median price of a starter home was $260,205 in September 2025, according toRedfin research, and the average income needed to afford one was around $79,400.
Depending on local markets, that starter home could be a condo, a townhouse or a small single-family home. In Washington, D.C., Redfin data analysis estimated the median starter home price was $390,711, compared to $244,027 in Houston and $170,030 in Philadelphia.
Starter Home Factors to Consider
While the initial price point may be lower for a starter home, you need to consider the operational cost of the home. Even though a home is smaller, if it’s older and has not been well-maintained or updated, you may find that your utility costs are higher than they would be in a well-insulated home with energy efficient features. Older homes are more likely to include paint, carpet and cabinets with chemicals that could be harmful to your health. Replacing these items can also be costly. Repairs and maintenance can also be expensive on a starter home.
Your plan to build equity quickly and sell your home for a profit may be derailed by market conditions, particularly if you chose a property in a less desirable neighborhood because of the school district or a lack of community amenities.
If you move to a more rural location in search of affordability, you may find that job growth – which is often closely tied to real estate values since it drived demand – lags behind suburban or urban areas. It’s important to do your research on a community and consult a real estate agent with insight into development or factors that impact property values before you buy, especially in an unfamiliar area.
Choose the Right Starter Home
If you want to buy a starter home, it’s best to plan to stay there for at least five years to build equity and offset the purchase costs.
Some tips to help your evaluate options:
Ask your agent about the history of the property and its value over time and look at sales and property tax history in online listing information.
Check out the home’s risks for flooding, wildfire and other climate risks on the listing or viaClimateCheck.
Have a home inspection and ask about energy efficiency and the longevity of existing systems and appliances.
Ask to see the sellers’ utility bills.
Calculate your complete cost of ownership: principal and interest, taxes, insurance, utility bills, HOA dues, repairs and maintenance.
Check out the address to see if you find aPearl Score to provide home performance information.
Talk to a contractor for estimates about what it will cost to make your home energy efficient and healthy.
Renter, Starter Home or Forever Home: How to Decide
Ask yourself these questions before you consider what’s right for you:
1. How much can you afford to pay per month for your housing? Your budget and housing costs in your area will determine whether you can afford to buy or rent now. The budget should be based on your personal calculations, not on what a lender says you’re qualified to borrow. Only you know about expenses and priorities that don’t show up on your credit report.
2. Have you calculated the full cost of owning – principal, interest, property taxes and homeowners insurance? Unlike renting, as a homeowner, you’re responsible for taxes, insurance and, often, homeowner association dues. This information should be on real estate listings or you can ask an agent.
3. Have you estimated utility costs, maintenance and home improvement costs? As a renter, you typically only pay utilities, and the energy efficiency of the home depends on your landlord. As a homeowner, you can control your utility costs better if you buy a home with energy efficient appliances and systems that’s been built with better insulation and energy efficient windows. If you buy a starter home, you’re likely to need to pay for home improvements to achieve a high performance home. Ask your agent or home sellers to estimate utility costs for a home you’re considering.
4. Do you have funds for a down payment and closing costs? If not, you may not be ready to buy. If you have some funds, buying a forever home that’s been built sustainably is likely to cost you less over the long-term than trying to quickly build equity in a starter home and move again or fix it. You can make a down payment as low as 3% or 3.5% with various loan programs. Budget 2% to 6% for closing costs – your lender, agent or title company can help you narrow that down for a specific location.
5. Do you qualify for homeowners assistance for down payment and closing costs? If so, you may be able to buy a house but not necessarily have the funds for home improvements. It may be better to consider a forever home if you can afford it. Look for programs by location at DownPaymentResource.com.
6. Are you willing to relocate to an area with a lower cost of living to become a homeowner? An affordable starter home may be more easily found in far distant suburbs, rural areas or states with a lower cost of living. While your employment status impacts your ability to move, also consider what else you may be giving up with a long distance commute or an out-of-state move, such as proximity to friends and family, higher wages, quality healthcare and access to activities you enjoy.
7. Do you think you’ll move or be transferred within the next five years, or that your family size will change?Typically, it takes at least five years and often longer to recoup the cost to buy. It will take even longer to recover investments in home improvements. If you think you can afford it, it’s possible to keep your first home as a rental property, but that requires becoming a landlord –possibly long distance – and there’s no guarantee your rental income will cover all costs, particularly for a starter home that needs work. You can talk to real estate agents to get an idea of current rental market conditions, although they change over time.
8. Do you have cash to spend on repairs and home improvements? To lower your operating costs and to create a home that meets your standards for comfort, energy efficiency and livability will usually cost money – especially in a starter home. If you can barely afford to buy at all, it may be better to invest in a home that will meet your needs for a longer time. You can ask a real estate agent, home inspector or contractor for a ballpark estimate of project costs or visitAngi for localized estimates.
9. Do you have skills to DIY home improvements? Even cosmetic home improvements such as painting a wall or installing a new backsplash take some skill. Bigger projects such as installing insulation require additional experience or professional help.
10. Do you know of reliable contractors in your area who can help you with repairs and improvements?Hiring the wrong contractor can cost you time and money, so if you’re considering a starter home it’s best to get recommendations from real estate agents and other homeowners in advance.
10 Questions to Ask Before Buying a Starter Home
Housing market dynamics have changed. Should You Skip the Starter Home?
Not so long ago, young homebuyers in their 20s or early 30s would buy a smaller, older, cheaper “starter” home with a plan to sell it in a few years for a profit and upgrade into a nicer home. That home, or maybe the next one, would be their “forever” home. Times have changed.
Today, when the average age of a first-time homebuyer is 40 – and homeowners stay in their homes for an average of 11 years before selling – more first-time buyers are skipping that starter home step and moving straight into their forever home. But age and timing don’t tell the whole story.
Savvy homebuyers of every generation now recognize that home value doesn’t depend on the sales price and the square footage. Instead, they realize that disposable houses are worth less by every standard than a home that’s built for high performance: to keep them safe in a storm, warm or cool even during extreme temperature events, and maintain affordability based on long-term metrics including operational costs.
More than 50% of homebuyers of every generation told Green Builder Media’s COGNITION Smart Data researchers that long term value and ongoing operational costs are bigger factors in their homebuying decision than upfront prices and the cost per square foot.
What is a Starter Home Today?
Buyers often think of a starter home as a place that doesn’t fully meet their expectations or hopes for where and how they want to live for the long-term. A starter home can refer to a home in a less desirable location, condition or size, but typically today it’s also defined by price. Nationally, the median price of a starter home was $260,205 in September 2025, according to Redfin research, and the average income needed to afford one was around $79,400.
Depending on local markets, that starter home could be a condo, a townhouse or a small single-family home. In Washington, D.C., Redfin data analysis estimated the median starter home price was $390,711, compared to $244,027 in Houston and $170,030 in Philadelphia.
Starter Home Factors to Consider
While the initial price point may be lower for a starter home, you need to consider the operational cost of the home. Even though a home is smaller, if it’s older and has not been well-maintained or updated, you may find that your utility costs are higher than they would be in a well-insulated home with energy efficient features. Older homes are more likely to include paint, carpet and cabinets with chemicals that could be harmful to your health. Replacing these items can also be costly. Repairs and maintenance can also be expensive on a starter home.
Your plan to build equity quickly and sell your home for a profit may be derailed by market conditions, particularly if you chose a property in a less desirable neighborhood because of the school district or a lack of community amenities.
If you move to a more rural location in search of affordability, you may find that job growth – which is often closely tied to real estate values since it drived demand – lags behind suburban or urban areas. It’s important to do your research on a community and consult a real estate agent with insight into development or factors that impact property values before you buy, especially in an unfamiliar area.
Choose the Right Starter Home
If you want to buy a starter home, it’s best to plan to stay there for at least five years to build equity and offset the purchase costs.
Some tips to help your evaluate options:
Ask your agent about the history of the property and its value over time and look at sales and property tax history in online listing information.
Check out the home’s risks for flooding, wildfire and other climate risks on the listing or via ClimateCheck.
Have a home inspection and ask about energy efficiency and the longevity of existing systems and appliances.
Ask to see the sellers’ utility bills.
Calculate your complete cost of ownership: principal and interest, taxes, insurance, utility bills, HOA dues, repairs and maintenance.
Check out the address to see if you find a Pearl Score to provide home performance information.
Talk to a contractor for estimates about what it will cost to make your home energy efficient and healthy.
Renter, Starter Home or Forever Home: How to Decide
Ask yourself these questions before you consider what’s right for you:
1. How much can you afford to pay per month for your housing? Your budget and housing costs in your area will determine whether you can afford to buy or rent now. The budget should be based on your personal calculations, not on what a lender says you’re qualified to borrow. Only you know about expenses and priorities that don’t show up on your credit report.
2. Have you calculated the full cost of owning – principal, interest, property taxes and homeowners insurance? Unlike renting, as a homeowner, you’re responsible for taxes, insurance and, often, homeowner association dues. This information should be on real estate listings or you can ask an agent.
3. Have you estimated utility costs, maintenance and home improvement costs? As a renter, you typically only pay utilities, and the energy efficiency of the home depends on your landlord. As a homeowner, you can control your utility costs better if you buy a home with energy efficient appliances and systems that’s been built with better insulation and energy efficient windows. If you buy a starter home, you’re likely to need to pay for home improvements to achieve a high performance home. Ask your agent or home sellers to estimate utility costs for a home you’re considering.
4. Do you have funds for a down payment and closing costs? If not, you may not be ready to buy. If you have some funds, buying a forever home that’s been built sustainably is likely to cost you less over the long-term than trying to quickly build equity in a starter home and move again or fix it. You can make a down payment as low as 3% or 3.5% with various loan programs. Budget 2% to 6% for closing costs – your lender, agent or title company can help you narrow that down for a specific location.
5. Do you qualify for homeowners assistance for down payment and closing costs? If so, you may be able to buy a house but not necessarily have the funds for home improvements. It may be better to consider a forever home if you can afford it. Look for programs by location at DownPaymentResource.com.
6. Are you willing to relocate to an area with a lower cost of living to become a homeowner? An affordable starter home may be more easily found in far distant suburbs, rural areas or states with a lower cost of living. While your employment status impacts your ability to move, also consider what else you may be giving up with a long distance commute or an out-of-state move, such as proximity to friends and family, higher wages, quality healthcare and access to activities you enjoy.
7. Do you think you’ll move or be transferred within the next five years, or that your family size will change? Typically, it takes at least five years and often longer to recoup the cost to buy. It will take even longer to recover investments in home improvements. If you think you can afford it, it’s possible to keep your first home as a rental property, but that requires becoming a landlord – possibly long distance – and there’s no guarantee your rental income will cover all costs, particularly for a starter home that needs work. You can talk to real estate agents to get an idea of current rental market conditions, although they change over time.
8. Do you have cash to spend on repairs and home improvements? To lower your operating costs and to create a home that meets your standards for comfort, energy efficiency and livability will usually cost money – especially in a starter home. If you can barely afford to buy at all, it may be better to invest in a home that will meet your needs for a longer time. You can ask a real estate agent, home inspector or contractor for a ballpark estimate of project costs or visit Angi for localized estimates.
9. Do you have skills to DIY home improvements? Even cosmetic home improvements such as painting a wall or installing a new backsplash take some skill. Bigger projects such as installing insulation require additional experience or professional help.
10. Do you know of reliable contractors in your area who can help you with repairs and improvements? Hiring the wrong contractor can cost you time and money, so if you’re considering a starter home it’s best to get recommendations from real estate agents and other homeowners in advance.
Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsors: Whirlpool Corporation and ProVia. Learn more about building and buying homes that are more affordable and less resource intensive.
By Michele Lerner, Associate Editor
Michele Lerner is an award-winning freelance writer, editor, and author who writes about real estate, personal finance, and business.Also Read