From Fast Company:
When 26-year old Memphis resident DeMario Johnson returns to his home after working a long day servicing waterwells for the local utility in Raleigh, North Carolina, he doesn’t just see a two-bed, two-bath home—he sees a place that makes his family happy. His wife loves having bigger rooms, his daughter delights in a space all her own, his two-year-old son spends afternoons stretching out in the hallway, running back and forth, and he personally loves the large, low-slung front porch.
But Johnson also sees security, something he and his family can depend on, no matter what. “When I’m paying my mortgage, I can see where my money is going,” he says. “When I’m renting, I feel like I’m pissing in the wind.”
For years, Johnson had tried to do what so many young adults are still struggling to accomplish in today’s housing market: finally buy a place of their own. The idea implicit in the starter home is that it is a beginning: you acquire an affordable home with a handful of bedrooms, laying down roots as a way to build assets for your future home. The starter home is not perfect, or a final destination—but it was a step on the ladder towards a stereotypical American Dream.
What was once a big, but manageable step, has for many become an impossible leap over an ever-widening chasm. The exact numbers vary depending on the market and the circumstances of a buyer or couple, but the math behind buying a starter, or entry-level, home today remains increasingly cruel.
The U.S. is short roughly 1.5 million homes, per Robert Dietz, chief economist for the National Association of Homebuilders, a gap weighing heavily on the kind of lower-cost models favored by first-time buyers. The competition for a smaller starter home has become cutthroat: even 15 years ago, realtors had more than 2.2 million vacant housing units available to show buyers. Today, due to rampant underproduction of housing for decades, there’s just 732,000, or a third less options, all with 30 million more Americans looking for a place to call home.
Underproduction has led one economist to call the starter home “an endangered species,” and others to consider current generations resigned toward renting for life. Rents have seen an astronomical rise in recent years, only outpaced by rising home costs, making it that much more challenging to save for a downpayment; the average mortgage now costs 52% more than rent, and a stunning 175% more in Seattle and Austin.