Starter homes are out of reach for most prospective homebuyers
Summary
Many Americans who do not own homes cannot afford a typical starter home, which costs about $200,000. Income levels are often too low to cover the cost, especially in expensive states like California, making it hard for people to buy their first home and build wealth.Key Facts
- Only 38% of non-homeowner households in the U.S. can afford a typical starter home.
- Starter homes are smaller and may need repairs but help people start building home equity.
- In 242 U.S. cities, starter homes now cost at least $1 million, tripling since 2020.
- A non-homeowner needs to earn about $62,000 per year to afford a starter home, but median income is only $55,000, creating a $7,000 gap.
- In California, the gap is much bigger: median income is $72,900 while needing over $140,000 to afford a starter home.
- Rhode Island is the least affordable state for starter homes, with only 16.5% able to afford them.
- Southern states like Mississippi, West Virginia, Arkansas, and Alabama have the highest affordability rates for starter homes, over 50%.
- Many people may need extra jobs or sacrifices to bridge the income gap to buy a starter home.
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