In the United States, the first home was the starting point for many to achieve the American dream, symbolizing prosperity and social mobility. Typically smaller and affordable, these homes are the first step for homebuyers to enter the real estate market.

Origins and History of the Starter Home

After World War II, the United States saw a surge in demand for housing as veterans returned home. In response to this crisis, builders such as William Levitt constructed affordable homes on a large scale. Typically 800 to 1,000 square feet, these homes were simple in design and low in cost, helping homebuyers build equity for larger properties.In 1947, these homes sold for $8,000 to $12,000, which is equivalent to $109,000 to $168,000 today. Some veterans were also able to take advantage of zero down payment loan policies through the Veterans Bill of Rights, which accelerated homeownership.

The Status and Challenges of the First Home

As times have evolved, the first home has gradually transformed from a symbol of affordability to a scarce resource. According to data, the average list price of a first home in 2019 was $220,000, while by 2021, that price had soared to $325,000, a 48 percent increase. Prices are even higher today, and rising mortgage rates and a dwindling inventory of listings further exacerbate the difficulties for first-time buyers.

Impediments to Building First-Time Homes

There are multiple reasons behind the declining supply of first-time homes:

Land and Construction Costs: Rising costs of land, labor and materials have narrowed the profit margins for building affordable housing.

Zoning Laws and Codes: Zoning regulations and building codes have limited the development of smaller homes, with more small lots being used for apartment buildings rather than single-family homes.

Consumer Preferences: Surveys show that 60% of Americans prefer larger, more widely spaced homes, resulting in less market demand for smaller homes.

Developer Strategies: Since larger homes can bring higher profits, developers tend to build larger homes, further compressing the supply of affordable housing.

Response and Development Trends

Although first homes are not being built as much as they once were, stakeholders are exploring a variety of solutions:

Policy support: Some states are working with the federal government to encourage the construction of affordable housing through tax credits, incentives, and the elimination of zoning restrictions.

Accessory Dwelling Units (ADUs): Eight states have passed laws allowing ADUs to be built on single-family home lots, which are small, detached homes that offer more flexible options for homebuyers.

The Tiny House Movement: As concerns about sustainability rise, smaller homes are favored. Some developers have introduced homes in the 400-square-foot range with community amenities such as dog parks and bike paths to meet the needs of first-time homebuyers by lowering costs through the land lease model.

The first home has gone through a tremendous change from the post-war surge of small, affordable homes to the gradual scarcity of today's homes due to rising costs and regulatory restrictions. Despite the challenges, governments, developers and consumers are trying to make a difference in a variety of innovative ways. The future direction of the first home will probably rely more on a balance of policy support and market demand to continue to provide first-time buyers with significant opportunities to move toward homeownership.