Midwestern Cities Offer Glimmers of Hope for First-Time Homebuyers
Analysis shows starter homes are more prevalent in cities like Toledo, St. Louis, and Detroit, though compromises may still be necessary.
First-time homebuyers facing escalating housing costs may find opportunities in Midwestern cities, where starter homes constitute a larger portion of available properties. Cities such as Toledo, Ohio, St. Louis, Missouri, and Detroit, Michigan, present a more favorable market, according to an analysis by Realtor.com.
However, purchasing a home in these areas often requires buyers to make concessions on factors like size, location, or the condition of the property, as a lower price does not guarantee immediate move-in readiness or a sought-after neighborhood. Realtor.com defines a starter home as one listed at or below 80 percent of the median listing price in its metropolitan area.
Nationally, the market for starter homes has tightened, with these properties now making up approximately 36 percent of active listings, down from nearly 38 percent seven years ago. The median price for these entry-level homes has also risen to $340,000 from $260,000 during the same period, resulting in about 21,000 fewer starter homes available despite a more than 30 percent price surge.
The Midwest Advantage
The Midwest and Rust Belt regions are highlighted for their relatively lower home price growth over the past decade and into the early pandemic years, combined with a substantial supply of entry-level properties. This has allowed incomes to keep pace with housing costs more effectively than in other parts of the country.
Toledo leads the nation with starter homes comprising 42.1 percent of its housing inventory. St. Louis follows at 40.7 percent, with Detroit at 39.8 percent, and Akron, Ohio, at 39.3 percent.
Kansas City and St. Louis are noted for offering a combination of a high proportion of starter homes and a wide array of neighborhoods dominated by these entry-level properties. Kansas City boasts 39 such neighborhoods, while St. Louis has 36.
In St. Louis, the median asking price for a starter home was $231,000, offering a more accessible entry point compared to many pricier coastal markets. Buyers in St. Louis may find structurally sound homes that require updating rather than extensive renovations.
Considerations for Buyers
While the share of starter homes is an important metric, buyers must also evaluate other factors such as school districts, neighborhood safety, transportation links, and the potential costs associated with renovating older properties. Online discussions have also raised concerns that the definition of a starter home might include properties requiring significant repairs or investment, rather than realistic options for immediate occupancy.
Affordability is relative, and even homes priced below the local median may still be out of reach for some first-time buyers once all associated costs, including mortgage payments, insurance, taxes, and maintenance, are factored in.
Real estate professionals advise potential buyers to prioritize the fundamental condition of a property over cosmetic features. Well-maintained older homes with solid structures and reliable systems can offer better long-term value than those with trendy finishes. Buyers willing to be flexible may find viable options in markets like Toledo, Kansas City, and St. Louis, provided they look beyond the initial price tag to assess a home's overall suitability and long-term affordability.