A starter home is the most affordable type of house or living space a first-time buyer can purchase. The cost of a starter home varies depending on location, but the median price of a starter home in August 2024 was $250,000. What used to be a 3-to-7-year stay in a starter home is now stretching much longer as the market remains competitive and interest rates stay high. Deciding whether to keep renting, buy a starter home, or go straight to a forever home depends on your personal financial and life goals. While starter homes aren’t as widely available as they once were, they can still be found in certain markets. If you’re thinking about buying your first place, a starter home is your launchpad into owning real estate. Generally, a starter home is the most affordable type of house a first-time buyer can purchase. Starter homes tend to be a bit smaller in square footage and come with a price tag that’s easier to manage compared to the broader housing market. 

The idea of the starter home gained traction after World War II, when a boom in small, affordable homes helped returning soldiers and their growing families transition into homeownership. Owning your own home became part of the idea of the American Dream.

But things have changed quite a bit in the decades since. 

Cheap land is harder to come by, and buyer expectations have also evolved. Today, especially in cities and busier suburbs, starter homes might not be quaint single-family houses with a yard. Instead, they might look more like a condo in Miami, FL or a townhouse in Portland, OR. Rising land costs, limited inventory, and changing buyer demographics all influence what qualifies as a starter home today.

“Starter homes aren’t what they used to be,” says Redfin Senior Economist Elijah de la Campa.  “A decade ago, a turnkey four-bedroom house in a nice neighborhood was often considered a starter home, but today, a small fixer-upper condo is often all a first-time homebuyer can afford. The American Dream is changing; for many, it no longer involves a house and a white picket fence.”