BLOGBlog posted On September 19, 2025
Despite some lulls in recent years, starter homes are beginning to see an uptick with inventory lately due to builders creating more entry-level homes. The hope is that this will inject some much-needed energy into the housing market and attract first-time buyers off of the sidelines. In addition, we’ll be unpacking the conventional definition of starter homes and examining the pros of buying old versus new. Ready to learn how starter homes are about to take the spotlight this season?
What is a Starter Home?
Let’s discuss first what starter homes are. Also called entry-level homes, these are houses priced relatively affordably for their location. They tend to be smaller, which coincides with their reasonable purchase price. We should note that the first home of any home buyer can be called their starter home, a home that is essentially the steppingstone to buying their forever home down the line. It just tends to have correlations with affordability and first-time buyers. While some believe only single-family homes (SFH) are the definition of starter homes, here’s a full range of options:
Builder Stocks Set to Surge
John Lovallo, a home builders analyst for UBS (a Swiss global banking firm), reported that “entry-level first-time homes are the best inventory now,” believing that stable rates and improving consumer confidence are the most important drivers of a housing recovery. With predicted rate drops, this will also curtail the expensive nature of rate buydowns, offsetting costs for both builders and consumers.
The Benefits of a Starter Home
Old vs. New: What Makes the Most Sense to Buy?
It’s important to note the recent discourse around starter homes right now. A new trend is that buyers are looking at older homes for starter home options as opposed to new builds. Many new builds have transformed into high-end housing, edging first-time home buyers (FTHB) out of the equation. According to Realtor.com, real estate agents are noticing that clients are asking to be shown older homes. Looking for properties in established areas (compared to the cookie-cutter neighborhoods of new builds) are more appealing in general to buyers. Additionally, lot sizes tend to be larger with older homes.
Agent Libby McKinney-Tristchler says that she is “seeing a noticeable shift toward older homes as today’s version of the starter home,” noting that older homes are tending to offer a price point that feels within reach.
It’s another important trend to note that many FTHBs are looking for BOTH older and smaller as they’re not interested in spending weekends maintaining big houses or oversized properties. RE/Max agent Bruce Ailion said that “going smaller and older is one of the few ways to get an affordable detached home.” Historic homes built with durable materials are offering a more appealing advantage to potential home buyers.
Programs for First-Time Buyers
Now that we’ve weighed the benefits of starter homes, how else can first-time buyers get ahead in this market? We offer programs that ease the affordability of homeownership and pair well with the advantages of buying an entry-level home.
As you weigh your options and decide when is the right time to buy, keep your eyes and ears on recent market trends. Despite high demand, rising construction costs, and investor competition, it is still possible to buy a starter home, especially with some smart strategizing, broadening the definition of the entry homes, and your willingness to be flexible.
With entry-level home inventory on the rise and rates trending lower each week, it’s important to keep your hand on the dial. Is now the right time to take the leap or do you keep waiting on the sidelines? If you’re ready to at least talk through options and get a preapproval drafted, we’re here to help, in any way that we can.
Source: CNBC, NerdWallet, Redfin, Realtor.com
*CMG Home Loans will cover all customary lender fees which are lender administrative fees, tax service fees, appraisal fee, and credit report fee. This offer does not cover discount points. Credit cannot exceed total fees. Rate Rebound is only valid on future conventional conforming, government, and jumbo loans in our retail channel (future Construction Loans, All in One, HELOCs, Bond, or HFA loans are excluded). Rate Rebound is only available on loans originated by CMG Home Loans. There may be additional restrictions based on investor. Offer may not be redeemed for cash or credit and is nontransferable. Offer cannot be retroactively applied to any loans. Offer may not be used with any other discounts, promotions, or interest-only/buy-down and second-lien products. This offer is subject to changes or cancellation at any time at the sole discretion of CMG Home Loans. Additional restrictions/conditions may apply. This is not a commitment to lend and is contingent on qualification per full underwriting guidelines. Program will be available on loans disclosed on or after 11/1/22. Program is applicable for refinances 6 months after closing up to 5 years from original note date and with a net tangible benefit which includes a rate reduction of 0.5%, going from an ARM to fixed rate, reducing loan term, movement to a more stable product, or a lower principal and interest payment. By refinancing the existing loan, the total finance charges may be higher over the life of the loan.
