What to Know About Starter Homes in Massachusetts

As a real estate agent, you’ll be selling an assortment of homes, some of them to first-time buyers. Depending on the area, you may find yourself selling starter homes to first-time homeowners. This is why it’s important to know what makes a starter home and who is buying them.

What Is A Starter Home?

A starter home is the first home a family or individual can afford to buy. A starter home doesn’t actually have to be a house. It can be a condo, townhouse or stand-alone structure with 1-2 bedrooms. It’s usually under 1,500 square feet and might need a little TLC, which is taken into account with its price.

Who Is Buying A Starter Home?

Generally, the people looking to buy a starter home are first-time homebuyers who are hoping to get out of the renting game and start building equity by owning their own house. Typically, homeowners expect to live in these dwellings for three to five years or until they see a return on their investment, then upgrade to a larger “forever” home. Some home buyers do end up making their starter home a forever home, investing money into renovations or simply deciding it’s in a convenient enough location that they have no wish to move again.

Is Buying A Starter Home Worth It?

This is a question many first-time homebuyers are faced with. There are many out there who are finding affordable starter homes difficult to come by. Given the current housing market, many houses that would be considered ideal starter homes are going for six figures. In fact, the average cost of a starter home was up 48% nationwide in 2020. Meanwhile, mortgage rates have skyrocketed to nearly double what they were in 2019.

It’s also becoming increasingly difficult to find houses that would be considered starter homes in terms of size at all. Many end up getting knocked down and a McMansion built in its place. Some of this can be attributed to the increased price of land. Builders prefer to build larger homes that take up most of the property in hopes of making a higher profit. Unfortunately, this results in a distinct lack of smaller, affordable homes for first time buyers.

Massachusetts in particular is having a housing shortage, with a deficit of about 100,000 homes according to a report by nonprofit Up for Growth. Some legislators are looking to put funding into the construction of more affordable starter homes for middle-class Americans, but until then, you may find potential buyers thinking hard about whether they should take the plunge or wait and save for a forever home.

The Pros of Buying A Starter Home

Despite the tight market and shortage of options, there are a few reasons first-time home buyers might still consider buying a starter home. For starters, rent prices and mortgage rates are nearly the same at this point. So if a person can get a loan to buy a house, it’s worth taking the plunge. This way they’ll at least own the property they’re paying for. Besides that, they’ll be building equity, which they can’t do while renting, which can go a long way to purchasing what they hope to be a forever home.

So while starter homes are in short supply, there is still demand. As a real estate agent, you benefit from that. Keep an eye out for these small-but-desired properties and be sure to give first-time buyers the grand tour when they come calling.