Starter home

A starter home or starter house is a house that is usually the first which a person or family can afford to purchase, often using a combination of savings and mortgage financing. In the real estate industry the term commonly denotes small one- or two-bedroom houses, often older homes but sometimes low-cost new developments. The concept originated in the United States during the post-World War II era when entry-level home ownership was a preferred option for young families and regarded as part of the American Dream.

The original concept of a newly built starter home outside of the city has changed due to both the end of low-cost land development and the changing preferences of successive generations in the United States. Since the end of the 20th century, more new homeowners are seeking different kinds of housing such as a condominium or older existing home.

In the United States, as real-estate market conditions continue to inflate and rise in major and medium cities where growth is fast, many starter homes are only affordable or available in metropolitan area outer suburbs. The American Dream of a new-build single-family home on a previously unused lot continues to move further out of urbanized areas to capture the lowest cost land. However as many areas in the nation experience urbanization in multiple clusters, states such as California experience diffused land economics where no low-cost land exists. This has caused many real estate developers to either develop many low-cost townhomes densely or large single-family homes at high sale prices. The latter is frequently chosen resulting in starter-homes continuing to favor people in upper income brackets as the majority of a metro area's suburbs approach build-out and the distance to work ratio approaches a maximum. Factors that influence developers include land prices, perceived value, market demand, city planning law, construction costs, and maintaining profit margins.

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