Starter Homes Return, Yet Entry Prices Are $90,000 Higher Than 2019

Practical outcome: For many would-be Northeastern buyers, condominiums are the only realistic route to urban homeownership, especially in walkable cores like Philadelphia Center City.

What this means for buyers and investors — a practical look

We interpret the data in pragmatic terms. Here is what different groups should take from the report and how they can act.

First-time buyers

• Expect to need higher incomes: ~$78,000 household income is the new benchmark for qualifying for starter homes, up from $43,000 seven years ago.
• Get mortgage-preapproved early. Sellers are favoring buyers who can close quickly.
• Expand your housing search beyond single-family detached homes. Attached homes, townhouses and condos can widen your options and improve negotiating leverage.
• Look for markets with inventory pressure in your favor: parts of the South and select Western metros show more choice and seller concessions.

Move-up buyers and downsizers

• Consider selling when you still have strong equity; that equity may make owning an entry-level rental or second property feasible.
• In seller-favored pockets, you can extract concessions to fund rate buydowns or closing costs.

Investors

• Be aware that in many Midwestern markets and select Sun Belt metros, investor competition is real and can drive up purchase prices for starter homes.
• Target markets where supply is still catching up and rents support investor returns, but watch zoning and local regulation that can restrict new supply.

Why supply alone won't cure starter-home affordability

Several agents in the Realtor.com report stress that ramping up construction is necessary but not sufficient. Builders often target the price points where profit margins are best, which tends to be mid-market and higher-end product. Increasing the number of small, basic units and accepting alternative product types is equally important.

Key structural barriers include:

• Limited developable land in dense metro areas.
• Restrictive zoning that blocks higher-density or missing-middle housing such as duplexes, triplexes and townhomes.
• High construction costs and interest expenses that push builders toward higher price points.

Heather O’Leary at eXp says the solution must include expanding the types of homes buyers are willing to consider and taking advantage of softer pricing within the attached-home market.

Seller incentives and how buyers can use them

One practical change in several markets is the rise of seller concessions. In Denver and parts of the West, sellers are offering credits large enough to fund interest-rate buydowns. These incentives alter monthly payment math and can make otherwise unaffordable listings workable.

Buyers should understand two things:

• Concessions can reduce your initial cash need at closing and lower monthly payments when used for a buydown.
• Relying on concessions can be risky in a faster market; they can disappear quickly, so a preapproval and quick decision-making are still essential.

Policy levers and what governments can do

Policymakers and local governments have levers that could improve starter-home access: easing certain zoning rules to allow more small-scale attached housing; accelerating approvals on infill projects; and supporting infrastructure to open up developable land. But these reforms face political resistance and take time to implement.

The Realtor.com analysis highlights that markets with permissive zoning and active building have produced more starter options. That is a blunt policy lesson: supply matters, but so does the type of supply.

Risks and red flags for buyers

• Mortgage rates remain a wildcard. Even if list prices fall modestly, higher mortgage rates can keep monthly payments elevated.
• Investor competition may outbid owner-occupant buyers in some entry-level segments, particularly in Midwest cities where yields tempt cash players.
• Condition and maintenance costs: many remaining starter homes are older or need work, which raises the true cost of ownership beyond the list price.
• Geographic mismatch: affordable homes may exist far from jobs and amenities, increasing commuting costs and reducing quality-of-life value.

Practical checklist for buyers today

• Obtain a mortgage preapproval and know your buydown and seller-concession options.
• Broaden product types you will consider: condos, townhouses, duplexes and new attached construction.
• Work with a local agent who understands submarket inventory and where concessions are most available.
• Budget for repairs and inspections; move-in-ready starter homes command premiums.
• Consider timing: markets in the South currently favor buyers more than many Northern metros.

Frequently Asked Questions

Q: What exactly is a starter home under this analysis?

A: Realtor.com defines a starter home as a listing priced below $350,000 nationally, or below 80% of a local market’s median list price. The threshold is therefore flexible and tied to local conditions.

Q: Are starter-home prices falling nationwide?

A: Starter-home prices are down about 4.2% from 2022 nationally, and inventory is up by roughly 220,000 listings versus 2022. But prices remain higher than 2019, and the typical starter home costs about $90,000 more than it did then.

Q: Which U.S. regions offer the best access for first-time buyers right now?

A: The South provides the most relief due to heavy new construction; the West shows local improvements in places like Denver and Phoenix; the Midwest is affordable in absolute terms but tightening; the Northeast is the most constrained.

Q: How can buyers make an offer more competitive in markets with seller concessions?

A: Being fully preapproved, offering flexible closing dates, and targeting listings where seller credits for rate buydowns are common will help. Also, consider waived contingencies cautiously; they can make offers stronger but add risk.

Final takeaway

The starter-home market is improving in aggregate, but that improvement is uneven and incomplete. There are more listings than in 2022 (+220,000) and prices are down 4.2%, yet supply is still ~300,000 listings below 2019 and entry affordability has worsened, with the median income needed to qualify rising to about $78,000. If you are buying, sell, or advising clients, the practical reality is simple: broaden acceptable product types, prepare paperwork in advance, and target regions where inventory and seller concessions give you real leverage. The arithmetic of monthly payments is the final arbiter in homeownership decisions.