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For Some Millennials, a Starter Home Is Hard to Find

By Julia Carpenter for The Wall Street Journal

July 4, 2021

The shortage of available starter homes feels like yet another hurdle blocking some millennials’ path to traditional money milestones. “It just feels like every little thing keeps getting put on hold,” said Samantha Berrafato, a 27-year-old house hunter searching for her first home in the Chicago area. “I’ve been putting having kids on hold, and I had put having a wedding on hold because we just couldn’t afford it. Now it’s like [that with] the house buying.”

The first rung on the homeownership ladder has long been an affordable “starter home.” These

houses, with their smaller footprints and selling prices, allowed young homeowners to build wealth

and upsize as they started their families.

As of 2020, the median age of a first-time home buyer was 33 years old, up from 30 years old a decade ago, according to the National Association of Realtors. Delaying homeownership has far-reaching consequences for buyers’ financial lives. Those who became homeowners between the ages of 25 and 34 accumulated $150,000 in median housing wealth by their early 60s, according to an analysis from the Urban Institute. Those who waited until between the ages of 35 and 44 to buy netted $72,000 less in median housing wealth.

“This is a big deal,” said Sam Khater, chief economist and head of Freddie Mac’s Economic and Housing Research division. “We need to think about how we talk about affordable housing, because for most people, when they hear affordable housing, there’s an instant negative reaction. They think ‘low-income,’ right? The issue now is these fissures have not just invaded the middle class. It’s now going up into the upper-middle-income strata.”

In addition to competing with other buyers, house hunters are sometimes competing with investors, hedge funds and other huge firms, according to previous reporting from The Wall Street Journal. As the summer selling season winds down, some house hunters feel they may soon have to find a rental that can bridge the gap or simply save their energy so they can resume looking when prices cool off.

Mr. Pinto of the AEI Housing Center predicts the wait could be longer for many buyers. He expects more people to continue moving outside of metro areas in search of more space and greater affordability as employers expand their work-from-home policies post-pandemic.

“We think this is going to continue for some time, for years,” Mr. Pinto said. “Bottom line is, if you’re in an area like Phoenix or Raleigh or Austin, the people who are the current residents who would normally want to get on the first rung of that ladder—they’re going to have a much harder time.”

When the hunt finally comes to a close, relief isn’t always immediate. Though Ms. Berrafato got her starter home, there remain many costs to consider, including moving expenses and getting out of their rental lease early.

“We are so relieved and excited, but now comes new stresses,” she said. We invite Millennials to visit us at for information on our mortgage for first-time buyers and we offer generous down payment and closing costs. You will be glad you did.


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