The Death of the Starter Home

I read a story titled “The Death of the Starter Home: Where Have All the Small Houses Gone.” The author Elena Cox defined small homes as homes with less than 1850 square feet and in September there were only 300k of these small homes on the market according to Realtor.com. Here are some reasons on why there is so much competition for these smaller homes she says—
· Covid sent many urban renters into the suburbs looking for homes to own
· Baby Boomers want to downsize into a smaller home
· RE Investors from mom and pop investors to big Wall Street firms are buying these homes to rent out.
· Even regular homeowners are turning their homes into rentals as they buy a new home.
· There are too many expensive barriers to build a small home from higher land and labor costs, supply chain challenges, and rising regulatory fees from all levels of government.
· This keeps builders from building smaller homes as its hard to build them profitably.

I would add these 2 points. First, FTHBs have very high demands for their first home from beautiful new flooring, big kitchens, large master bedrooms and baths with 5 piece baths, granite or quartz countertops, etc. Adding all these features makes housing much expensive. Second, we need to build with modular construction instead as it’s cheaper and faster to build.