- Starter homes under 1,400 square feet now make up just 9% of new builds, down from 40% in 1982. Rising construction costs, limited land, and restrictive zoning laws are key factors behind this decline.
- Home prices have surged over 52% nationwide from January 2020 to October 2024, while labor and material costs rose by 50% over the last decade. Land prices have climbed two and a half times more, making affordability a major issue.
- First-time homebuyers face record-high barriers, with their median age reaching 38 in 2024, compared to 29 in 1981. Meanwhile, an unusual market dynamic shows low first-time buyers but a high number of cash buyers.
- Homebuilders say they are contending with rising construction costs and limited availability of land in addition to government red tape.
- The death of the starter home sped up after the 2007-2008 global financial crisis as the homebuilder industry consolidated. The annual rates for new home construction remains well below those observed in the early 2000s and years prior.
- “It is such an unusual market because we have an all-time low of first-time home buyers, but an all-time high of all-cash buyers,” said Jessica Lautz, deputy chief economist at the National Association of Realtors.
Courtesy of CNBC.com, read more at their website