Rethinking the Starter Home

First-time home buyers are swapping the idea of a starter home — modest, often short-term housing that comes with baggage — for a first home that works for their lives over time. “Buyers expect it to feel like a home they can stay in, not just a quick home to step up into [from a rental],” says Ginger Wilcox, president of Better Homes and Gardens Real Estate.

The desire for something better is understandable, but raises important questions: Can a first home be more affordable and still offer buyers the space, location, and condition they want for now and the future? What trade-offs might first-time buyers need to make?

Factors Redefining a Starter Home

Renuity, a home improvement firm, found that half of the 1,000 first-time home buyers they surveyed had decided to skip traditional starter homes. The reasons were high prices, limited availability, and competition from investors. “Home prices have skyrocketed, while wage growth has lagged, making first-time purchases much more challenging,” says Ryan Fitzgerald, owner of Raleigh Realty in Raleigh-Durham, N.C.

Prices created an affordability gap. Redfin reported a median starter home price of $260,205 in fall 2025, while data from the National Association of REALTORS® showed a median existing-home sales price of $409,000 in November 2025.

How First Homes Are Evolving

First-time home buyers appear less focused on compromise or square footage and prioritize lifestyle fit and flexible, thoughtful design, according to Better Homes and Gardens’ report, 2026 Design Trends Moving Real Estate. “The right fit often matters as much as the price tag — a shift that’s redefining the meaning of a starter home,” the report notes.

Features Buyers Want

The study also found buyers want these features:

• 86% — flexible layouts, including multifunctional rooms like office or guest room hybrids
• 76% — patios, porches, and balconies
• 63% — big windows and natural light
• 60% — updated kitchens and baths, which help them overlook a home’s square footage
• 52% — smart storage

“The starter homes people fall in love with are the ones that instantly feel welcoming, the ones with the small, intentional touches, like natural light, a thoughtful layout, or a cozy spot outside, that make a house feel like a home,” Wilcox says.

Buyers also prefer move-in ready homes. Nearly 60% say they’d go over budget to avoid a home with renovations, according to a Rocket Mortgage survey of first-time home buyers.

Choosing Housing Options to Support Affordability

To navigate affordability challenges, first-time home buyers are exploring alternatives to the single-family home. Fitzgerald points to townhomes and condos and notes a trend of using a multifamily property as an entry point, with a buyer occupying one unit and renting out the other to offset their mortgage.

Another strategy is pooling resources. Doubling up with family or buying with roommates can share down payment and other ownership costs, says Jessica Lautz, NAR deputy chief economist. Rocket Mortgage data shows that 10% of first-time home buyers bought with friends, 4% with parents, and 3% with siblings, while 57% bought with a spouse or partner.

Tips for Making a Starter Home Work

With higher costs and fewer clear-cut “starter” options, first-time buyers are looking for help from agents who are REALTORS®, members of the National Association of REALTORS®. Agents help buyers identify flexible housing options, evaluate the total ownership costs, and connect with lenders and financing programs, such as low-down- payment loans geared to first-time home buyers.

Agents offer these tips for first-time buyers:

1. Buy smarter. Half of first-time home buyers report repair costs were higher than they expected, according to Renuity’s survey. Smaller homes may offer lower maintenance and reduced costs, Fitzgerald says. Factor in utilities, association fees, taxes, insurance, and maintenance.
2. Explore different housing types. Duplexes, townhomes, and condos may provide more-affordable entry points. But the trade-off may be higher association fees, Fitzgerald says.
3. Be willing to compromise. Identify must-haves versus nice-to-haves. First-time home buyers said they made trade-offs such as purchasing an older home and accepting longer commutes, fewer upgrades, and smaller homes, according to Renuity’s survey.
4. Focus on essentials. Priorities include safety, schools, and neighborhood amenities, according to Rocket Mortgage’s survey. Home inspections also were critical, with 56% of first-time buyers rejecting homes with costly issues like water damage or roof problems.
5. Think long term. NAR data shows that many first-time home buyers expect to own their first home for a median of 15 years, much longer than first purchases for past generations. Look for homes that can accommodate growing needs, such as extra bedrooms or baths or the flexibility to add on later.

Why That First Step Matters

First-time home buyers say they’re motivated by the benefits of home ownership: building equity, financial stability, and control over their living space. Conversely, delaying that first purchase carries a steep cost. NAR estimates that delaying a home purchase for a decade can result in roughly $150,000 in lost equity from a typical starter home.

The starter home may look different than it once did. As a strategic first step, it can still play a powerful role in helping buyers build long-term stability, flexibility, and wealth. To make it work longer and better for you, you’ll need to prioritize your musts and wants and prepare to make trade-offs.

Melissa Dittmann Tracey is an award-winning journalist covering the housing market. You can hear her weekly as the host of Real Estate Today. She is also the creator of the Styled, Staged & Sold blog and a contributing editor for REALTOR® News. Follow her on Instagram @housingmuse.

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