Row Houses & the "vanishing" starter home

I love living in and driving around Old Town Fort Collins, Colorado. The quaint tree-lined streets are filled with a diverse selection of houses that represent the best of how American towns used to be developed. Nearly every street in the area is filled with cozy, comfortable one and two bedroom cottages and bungalows, which are located right alongside beautiful mid-size craftsman and colonials. Those same streets have a pleasant smattering of gorgeous large Victorians and estate-style houses. That sort of mixed-market neighborhood creates a solid community, one which offers a vanishing relic - the starter home.

People tend to have their own understanding, but starter homes are typically perceived as being on the smaller side, in need of renovation, or both. Buyers often go in expecting to stay a few years to build equity, then trade up for something bigger and generally better. But the concept is antiquated given current prices and big floor plans, a dynamic that’s icing out many entry-level shoppers.

Builders have been constructing bigger and bigger homes during the past half-century. Homes with four or more bedrooms made up nearly half of all new construction in 2022, according to Census Bureau data. That compares with 1 in 5 in the 1970s.

More rooms and more upgrades mean more costs. The U.S. median home price is $410,800, up nearly $100,000 since 2019, federal data shows. Layers of local regulations, as well as market dynamics, have pushed builders to go big, rather than catering to first-time buyers with less to spend. “You have zoning requirements that have encouraged large lot sizes,” said Dennis Shea, a housing expert at the Bipartisan Policy Center. “Home builders, particularly in the wake of the Great Recession, where they were very negatively impacted, find it easier to build larger homes that have higher profit margins.”

The key to the newly-coined "affordability crisis" obviously starts with housing. And finding a way back to the starter home, or a society more accepting of townhouse and rowhouse construction, could be an important key to the national economy in the new era.