Entry-Level Residences Remain Accessible in These Premier Metro Areas

Although starter homes are becoming increasingly scarce throughout the nation, several affordable markets—predominantly situated in the Midwest—provide first-time purchasers with a robust and varied inventory of entry-level residential properties.

What constitutes a starter home in precise terms? According to Realtor.com® economists, this category of real estate encompasses a property listed at or below 80% of the median listing price within its metropolitan area during a designated timeframe.

A typical starter home is characteristically compact and modest in its amenities, serving as the initial step on the property ownership ladder that provides, “budget-conscious first-time buyers an entry point into homeownership.”

According to a recent Realtor.com report, the proportion of starter homes has declined from 38.1% to 36.2% of the total active inventory at the national level throughout the preceding seven years, concurrent with the median price increasing substantially from $260,000 to $340,000. In essence, approximately 21,000 fewer starter homes are currently accessible compared to 2019, while simultaneously commanding prices exceeding 30% higher than their previous levels.

To examine starter-home patterns across different regions, Realtor.com analysts examined listing information spanning 8,300 ZIP codes throughout the 100 most populous metropolitan areas in the U.S., identifying locations where purchasers may acquire entry-level residences situated in appropriately balanced communities.

Throughout the U.S., approximately 60% of ZIP codes demonstrate mixed-income characteristics, featuring an assortment of residential properties priced beneath the median market value alongside premium listings designed for buyers seeking to upgrade. Concurrently, starter-home-dominant neighborhoods constitute over 18% of residential areas across the nation’s 100 largest metropolitan regions.

Within 81 of these 100 metro areas, neighborhoods that encompass both economical starter homes and sophisticated, higher-end residential options represent the predominant market composition.

“The takeaway here is that most starter-priced homes aren’t found in a clearly ‘starter’ ZIP code, but sit in mixed or even trade-up-leaning areas,” said Hannah Jones, Senior Economist at Realtor.com.

Economical metropolitan areas in the Midwest and Rust Belt regions demonstrate exceptional performance within the dataset, exhibiting the nation’s most substantial proportions of entry-level residential properties in the current year. Toledo, Ohio leads this category with 42.1% of available inventory, trailed by St. Louis at 40.7% and Detroit at 39.8%.

Nevertheless, the proportion of starter homes within a metropolitan area represents merely one dimension of the complete picture. For prospective purchasers, it remains equally critical that available properties within their financial parameters are distributed throughout various neighborhoods possessing favorable attributes, including reduced crime statistics, superior educational institutions, and pedestrian-friendly infrastructure.

“All three of these metros have seen below-average price growth since 2019 and have a large, resilient base of entry-level inventory,” said Jones. “Toledo boasted the highest share of starter homes in 2019 as well, but Detroit and St. Louis have both moved up in the rankings.”

When evaluating the optimal combination of entry-level housing availability and neighborhood diversity, two metropolitan areas distinguish themselves: Kansas City and St. Louis. According to Jones, these markets demonstrate a higher proportion of starter homes relative to national benchmarks, with Kansas City at 37.7% and St. Louis at 40.7%, supplemented by an above-average concentration of starter-focused ZIP codes.

Prospective buyers in Kansas City have access to 39 distinct neighborhoods, whereas St. Louis offers 36 alternatives.

During August, the median price for a Kansas City starter home reached $312,000. According to Rieke Male, the purchasing power of this budget varies considerably depending on geographic location. In Johnson County, this investment typically secures a two- to three-bedroom residence, frequently including garage space.

Within Kansas City’s municipal boundaries, budget-conscious purchasers would be well-advised to explore the vintage, compact bungalows prevalent in established neighborhoods such as Brookside Park and Waldo. Conversely, moving northward enables buyers to maximize their financial resources more effectively.

“Kansas City is a unique market with outskirt areas still fairly close in with great prices,” Rosemary Rieke Male, a real estate agent at Better Homes and Gardens Real Estate Kansas City Homes. “We have highways circling the whole metro to make it easy to get anywhere but still such a central U.S. location.”

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