Throughout time, it has been quite common for young professionals and/or newlyweds to rent for a few years after starting their first job before buying their first home several years later. Known as a “starter home”, these homes were often single-family homes that were smaller than the average home in the area. Needless to say, the typical tight budget for these buyers would greatly limit the type and size of home that could be purchased. Ultimately, it would provide a chance at home ownership and the building of home equity.
The evolution of the starter home
Tight inventories and resulting skyrocketing home prices is making it quite challenging for first-time home buyers. According to the National Association of Realtors® (NAR), the average price for a starter home rose from $233,400 in 2019 to $307,400 by the end of 2021. This resulted in the average monthly payment jumping from $1,038 to $1,224. Not surprisingly, this has forced many would be first-time home buyers to delay their home search in order to allow for more time to save money. Of course, we have seen the average age of first-time home buyers increase over the years as well. According to NAR, a first-time buyer’s median age climbed from 32 years old in 1981 to 45 today. Not surprisingly, this group’s median income increased from $80,000 a year in 2020 to $86,000-plus in 2021.
In addition to tight inventory, first-time home buyers are also seeing increased competition from institutional investors looking to add rental properties to their portfolios. With home prices getting out of reach for many first-time home buyers, the rental market is ultimately benefiting as well.
Summary
With more Americans delaying the purchase of their first home, we are certainly seeing the starter home evolving. Whereas starter homes have historically been small, they are now getting bigger in size with larger outdoor spaces as well. Since the average age of the typical starter home buyer is increasing, they tend to have a slightly bigger budget to work with as well. Add in the fact that more Americans are working virtually from home and this also results in the need for additional space. In any market, it pays to hire a local and knowledgeable real estate agent that will be able to guide you in your local market.
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!
