Is the American Dream still within reach? Realtor Wendy Wilmowski recently joined The Drew Mariani Show to discuss a vanishing property-type: the starter home.

What was once considered the entry point to homeownership has been slowly disappearing. According to the real estate company Zillow, “A record 242 U.S. cities now have starter homes that cost $1 million.” Of those 242 cities, 105 of them are in California, 41 of them are in New York, and 26 of them are in New Jersey.

Size: Houses are Getting Bigger

One reason starter homes have disappeared is size. “Builders have been constructing bigger and bigger homes during the past half-century,” according to a piece published in the Washington Post. Half of all houses built in 2022 had four or more bedrooms, the outlet reported. “That compares with 1 in 5 in the 1970s.”

Policy: Regulatory Expansions

One reason that homes have gotten bigger is consumer demand. However, Scott Lincicome, economic policy and trade expert at the Cato Institute, says government regulation makes it difficult for construction companies to make a modest profit off a starter home. “In Minnesota, for example, it’s effectively impossible for developers to build a home in the $150,000 to $250,000 price range because of not just [sic] land and construction costs but eye-popping regulatory fees,” he reported.

Interest Rates: Existing Rates are Too Good

Even if many buyers are ready to make a first-time purchase, many current homeowners are staying put because of their low interest rates. These low rates from 2018 to 2020 are like golden handcuffs. “They want to move up. They’re busting out of their houses, but they can’t,” realtor Wendy Wilmowski told Drew. “The math doesn’t work for them. Their salaries haven’t increased to the same degree.”

DIY: Buyers are Looking to be More Handy

In a difficult housing market, Wilmowski says training young people to be handy is a necessity. “There’s this talk amongst my crowd [that] we gotta get our young men in trades [so] that they can then help each other” with HVAC, plumbing, roofing, etc. That would allow first time buyers to purchase a house requiring maintenance without paying for expensive contractors.

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