Your Guide to Starter Homes in Today’s Housing Market: Do They Still Exist?

• A starter home is the most affordable type of house or living space a first-time buyer can purchase.
• The median price of a starter home in September 2025 was $260,205.
• What used to be a 3-to-7-year stay in a starter home is now stretching much longer as the market remains competitive and interest rates stay high.
• Deciding whether to keep renting, buy a starter home, or go straight to a forever home depends on your personal financial and life goals.
• While starter homes aren’t as widely available as they once were, they can still be found in certain markets.

If you’re thinking about buying your first place, a starter home is your launchpad into real estate. Typically the most affordable option for first-time buyers, starter homes are smaller and come with a more manageable price tag than the broader market. 

The concept took off after World War II, when small, affordable homes helped returning soldiers and their families step into homeownership, a key part of the American Dream.

Today, things look different. Cheap land is harder to come by, and buyer expectations have also evolved. In cities and busy suburbs, starter homes might look like a condo in Miami, FL or a townhouse in Portland, OR rather than a quaint single-family home. Rising land costs, limited inventory, and changing buyer demographics all influence what qualifies as a starter home today.

“Starter homes aren’t what they used to be,” says Redfin Senior Economist Elijah de la Campa.  “Today, a small fixer-upper condo is often all a first-time homebuyer can afford. The American Dream is changing; for many, it no longer involves a house and a white picket fence.”

In this article:
What is a starter home?
How much does a starter home cost?
How long should I stay in a starter home?
Starter home vs forever home vs renting
Where can I find affordable starter homes?
How to buy a starter home
Is it still possible to buy a starter home?
FAQs

So, what is a starter home?

Historically, starter homes were smaller, more affordable houses designed to help first-time buyers enter the market. Often around 1,200 square feet with two bedrooms and one or two baths, these homes sometimes came with trade-offs like less desirable locations or fewer upgrades.

Now, a home’s price is likely to define if it is a starter home—and what’s considered “entry-level” homeownership can vary widely by region. In high cost of living areas, homes that need TLC often sit at more approachable price points for first-time home buyers than turnkey homes. But with renovation costs on the rise, demand for move-in-ready homes is starting to outpace that of fixer-uppers.

How much does a starter home cost?

Generally, the cost of a starter home is priced below the average home in any given area. According to Redfin data, the median price of a starter home in September 2025 was about $260,205, and the average income needed to afford one was around $79,400.

But the national average and the cost of houses for sale in your area can look drastically different. In many places, rising home prices have outpaced income growth, making affordability a big challenge. The overall median home price in the country, for instance, grew from $296,485 in December 2019 to $427,179 in December 2024, a jump of 44%. 

High demand from first-time buyers and downsizers, combined with limited entry-level inventory, has created a competitive market. In fact, the average age of a first-time buyer in the US is now 38, up from 35 the previous year.

“Starter home prices have climbed so much over the last decade that even with mortgage rates coming down from their peak, affordability is still a huge hurdle,” says David Palmer, a Redfin Premier agent in Seattle. 

“At the same time, buyers who already own a home have more leverage—they can use the equity they’ve built to make stronger offers. That means entry-level buyers are often losing out to move-up buyers who have deeper pockets.” 

Starter Home Affordability by Metro: 10 Most Populous Metros (September 2025)

Redfin data as of September 2025

How long should I stay in a starter home?

In the past, many homeowners stayed in their starter homes for around three to seven years building equity. However, it’s now common to see homeowners stay put longer, averaging 12 years in many parts of the country. First-time buyers in particular are taking longer in their search for a home that meets their needs more long-term.

How long you actually stay in a starter home often depends on your personal situation. Maybe your family grows, you get a new job that requires a move, or your financial situation changes, allowing you to look for a bigger or more permanent “forever home.” 

For first-time buyers and seasoned homeowners alike, the decision to continue living in their current home helps avoid rising home prices and potentially higher interest rates—otherwise known as the “lock-in” effect.

Starter home vs forever home vs renting

So is buying a home better than renting in today’s economy? If you’re thinking about buying a starter home, it’s helpful to compare it to other options like continuing to rent, or jumping straight into  a “forever home” to choose what works best for your long term goals.

Is renting or buying better long term?

For many, deciding whether to rent or buy is not only about the numbers, but what kind of stability and flexibility you want in your life. 

Buying a home can bring long-term financial and emotional rewards. Each mortgage payment helps you build equity, giving you something tangible for your money. Rent, on the other hand, can increase over time, while a fixed-rate mortgage offers predictable payments. Plus, homeowners might qualify for tax breaks on mortgage interest and property taxes.

But if you’re saving up for a strong down payment, expect to move in a few years, or prefer fewer responsibilities, renting could be a smart choice over buying.

Pros of buying a starter home over renting

• The opportunity to build long-term wealth through home equity and appreciation. The payments you make on your mortgage go towards your personal wealth, rather than to a landlord. 
• More stable: predictable and steady monthly payments and potential tax benefits help with long-term financial planning and budgeting.
• The freedom to make it your own: paint, remodel, garden. You’re not limited by a lease or landlord permission.
• Even if it’s not your forever home, a starter home can help you build equity, credit, and make it easier to move up later; and if you sell, that equity can go toward your next down payment.

Cons of buying a starter home vs renting

• Buying comes with higher upfront costs: the down payment, closing costs, inspections, and moving all add up—not to mention savings for emergencies. Renting is usually the first month’s rent and a deposit.
• Maintenance and repairs fall to the homeowner: When you rent, the landlord or property management is responsible for any repairs; if you own your home, the cost and responsibility falls to you.
• Less flexibility to move: Selling a home takes time and money. If life changes quickly, like a new job in another city, it can be harder to make the move than breaking a lease.
• In higher cost of living cities, renting can actually be more affordable than owning a home.

Should I buy a starter home or forever home?

If you are ready to buy, what kind of home you should look for ultimately depends on your lifestyle, goals, and timeline.

A forever home is designed for the long haul—usually, for those planning to stay around 10 years or longer. There’s space to indulge in projects or hobbies, host friends and family, and put down roots. But forever homes usually have higher price tags and ongoing expenses that can stretch the budgets of first-time buyers.

Starter homes, on the other hand, can get you building wealth sooner and gain experience as a homeowner, even if it’s not your dream home yet.

Pros of a starter home over a forever home

• More affordable entry point: Starter homes usually have a lower purchase price, a smaller down payment, and more manageable monthly payments.
• You build equity sooner: Each payment you make on your home grows your investment; and according to Redfin data, lower-priced starter homes are in high demand compared to houses at the top of the price tier.
• Lower upkeep costs: Smaller, less-expensive homes often come with lower property taxes and less maintenance than larger houses.
• A faster path to homeownership: A starter home might not have everything on your wishlist, but it helps get your foot in the door of real estate and learn what matters for you in a home.

Cons of buying a starter home instead of a forever home

• You might outgrow the space faster than you think, especially if you work from home, want to rent out rooms, or start a family.
• Starter homes in many areas often need updates or repairs, especially if the home is older.
• A starter home might not have all the features you want in a home long-term, or be in a less desirable area.
• You’re more likely to move again, repeating the buying and selling process which can be expensive. If you don’t stay in the home long enough, you might even experience a loss in equity.

In the long run, while the initial plan might be to move to a bigger place later, some people find that their starter home suits them perfectly and they choose to stay for many years, or even for good. Over time, with some updates, additions, and personal touches, a starter home can become the perfect forever home.

Where can I find affordable starter homes?

If you’re looking for affordable starter homes, there are some key locations to watch. Some areas in the Midwest, for instance, could actually see home prices rise due to more people moving to the Rust Belt.

“Midwest cities have risen in popularity because they’re more affordable than cities in other parts of the country, but many buyers are now widening their search to the suburbs after being priced out of popular urban areas,” says Redfin Chief Economist Daryl Fairweather. 

Heading south, Texas and Florida are known for having a decent number of starter homes generally priced below the national average, with home building rates and land availability being key factors. On the East Coast, cities like Harrisburg, PA; Rochester, NY; and Baltimore, MD, are looking promising for first-time buyers because they’re relatively affordable and have job opportunities. The Sun Belt region is also seeing growth, with builders drawn to lower land and labor costs. 

>>See more: The 10 Cheapest States to Buy a House in the U.S.

How to buy a starter home

1. Check your finances and readiness

• Make sure your income is stable, your credit score is in good shape, and you’ve started saving for a down payment and closing costs.
• Factor in additional costs like property taxes, insurance, and maintenance. This comprehensive Redfin guide walks you through what to budget.
• Ask yourself: am I ready to stay put for a few years? Owning makes most sense when you plan to stick around. 

2. Know what you can afford and stick to a budget

• Use the Redfin affordability calculator and get pre-approved for a mortgage so you know your practical limit. 

• With starter homes especially, the budget tends to be tighter: consider a smaller sized home, fewer amenities, and lower maintenance expectations so you don’t overextend yourself.

3. Find your “must-haves” vs your “nice-to-haves”

• Because you’re buying a starter home, it’s especially useful to write down what you absolutely need (location, commute, number of bedrooms) and what you can compromise on (yard size, high-end finishes). 

• You’ll probably upgrade later: a lower upfront cost now can mean more flexibility later.

4. Choose the right location (but expect trade-offs)

• Location matters: a slightly smaller home closer to work or amenities might make more sense than a bigger home farther out. 

• Also evaluate resale potential: since starter homes are often short-term stepping stones, you’ll want a neighborhood that remains desirable.

5. Work with your team (agent, lender, inspector) and start searching

• Pick a real estate agent who knows the “starter home” market in your area and can help you find realistic opportunities.

• Start touring homes with your list in mind. For each property you visit, pay attention to  the condition, upkeep needs, how much work you’re willing to take on.

6. Make an offer and be realistic

• Don’t get into a bidding war for a home that puts you above your budget just because you feel you have to.

• Think about what contingencies you’ll include (like inspection and appraisal) so you don’t walk into unexpected costs or issues.

7. Inspect, appraise, and close the deal

• Once you’ve secured an offer, you’ll move to the home inspection. As a first-time homebuyer, getting an inspection protects you from buying a money pit.

• After everything checks out, you’ll get the home appraised, close, and move in. (This process can take 45-60 days after offer acceptance, but timelines vary.)

8. Plan ahead for your time in the home

• While starter homes are often thought of as the first of many homes, many people stay longer than planned. As you live there, treat it as both a home and an investment.

• Be aware of resale costs: if you sell too soon you might not build enough equity. Staying at least two years ensures you won’t pay capital gains tax, but it could take even longer for your home value to grow enough to make sense to sell.

>> See more: How to Calculate Home Equity

Is it still possible to buy a starter home?

While high demand, limited inventory, rising construction costs, and competition from investors and downsizers have made starter homes harder to find, buying one is still possible—especially with a bit of strategy and flexibility.

One promising trend is the increase in housing inventory, particularly in the entry-level market. More available homes mean more options and, in many areas, less intense competition than in recent years.

Smaller homes and multi-family options like duplexes and townhouses are also gaining popularity as buyers prioritize affordability. Though the path to homeownership may still involve compromise, rising supply and slowing price growth are opening more doors for first-time buyers. While the housing market is constantly changing, starter homes are still a viable solution to homeownership.

FAQs about starter homes

What does a starter home mean?
A starter home is usually a homebuyer’s first step to homeownership: a smaller, more affordable place that helps you enter the housing market. While it might not immediately be your dream home, a starter home allows you to start building equity and gain experience as a homeowner. Over time, that equity can help you move up to a larger or more permanent “forever” home.

What is a good starter home?
A good starter home balances affordability, location, and potential. It’s a place that fits your budget today but still meets your basic needs: enough bedrooms, a manageable commute, and a space you can maintain financially. Whether it’s a condo, townhouse, or cozy single-family home, the best starter home is one that helps you start building stability and confidence as a homeowner while sticking within a reasonable budget.

Is there such a thing as a starter home anymore?
Starter homes still exist, they just look a little different in today’s market. Inventory availability and rising prices have redefined what a starter home looks like to include smaller homes, fixer-uppers, and even condos or townhomes. While the definition of a starter home has evolved, the idea of starting small and building equity over time is still very much alive.

How long do people typically stay in a starter home?
Many homeowners are extending their stay in their starter home for around 5-10 years, but there’s no hard and fast rule. Some people move sooner as their needs or situations change, and others stay longer and might even turn their first home into their forever one. What’s important is that your starter home helps you grow both personally and financially in a way that supports your next steps.

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