Home News The Entry-Level House Has Become a Myth, Few Can Afford Them – Mish Talk

The Entry-Level House Has Become a Myth, Few Can Afford Them – Mish Talk

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Entry-level homes that were once ubiquitous are now almost a myth. Point2Homes comments on starter homes and where to find them..

Once upon a time, nearly 70% of all new homes were starter houses. Single-family homes under 1,400 square feet priced at $6,990. But that was in the 1940s. Fast forward to 1980 and that share has dropped to 40%. Then, in 2019, the U.S. Census Bureau reported that just 7% of all new homes are small entry-level homes that are affordable for first-time buyers.

Rising land prices, zoning restrictions and soaring building materials have turned the frugal, bare-bones homes of yesteryear into the subject of myths and legends, making them real unicorns of the real estate market. More elusive than ever, this type of home seems all but extinct. Tenants only earned 30% and 34%, respectively, of the income required to purchase the starter house.

When a starter home isn’t a starter home when it costs $1 million.

The median starter home in San Francisco costs as much as the median starter homes in the top 10 most affordable cities combined.

The average rental household income is $100,715, but a first-time buyer needed $251,190 to comfortably cover their mortgage payments. This means he’s $150,475 (or 60%) short of the San Francisco renter’s dream of owning a home. Additionally, in her three other cities (San Jose, California, Los Angeles, and New York), renters were short of her by more than $100,000 to pay off the mortgage. In fact, the Los Angeles renters had the worst of it. He earns 70% less than he needs to comfortably cover his monthly mortgage.

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