The Next Playbook: Bringing Back The Starter Home
A new policy brief from the Center for Affordable Housing Lending and NAAHL examines the forces behind the starter home shortage—and what Congress can do about it.
For generations, the starter home was how everyday families took their first step toward financial security. A modest house at an attainable price stood as a place to build equity, put down roots, and create something to pass on to the next generation.
Today, the Center for Affordable Housing Lending (the Center), in partnership with the National Association for Affordable Housing Lenders (NAAHL), released The Next Playbook: Bringing Back The Starter Home, a research brief from Senior Fellow Julia Gordon and NAAHL’s Aaron Shroyer that documents the forces driving the starter home shortage:
Small homes (under 1,400 square feet) dropped from 40% of new construction in 1980 to just 9% today.
More than half of all U.S. housing stock is over 40 years old, limiting the supply of move-in-ready options for buyers.
The median homeowner tenure is now 12 years, reducing turnover and available inventory.
More than 5 million single-family homes have converted to rentals after 2008 and never returned to the for-sale market.
74 million Millennials and 71 million Gen Z Americans are entering their prime homebuying years right now—with fewer options than any generation before them.
The result: prices for the few starter homes that exist have been bid up sharply, pushing them further out of reach for the very buyers they are meant to serve.
"The Center for Affordable Housing Lending was established to do exactly this—identify the places where focused discussion and clear policy solutions can make a real difference," said Sarah Brundage, President and CEO of NAAHL and the Center. "This brief on starter homes is where we start. With Julia Gordon's expertise leading this analysis, we're unraveling a problem that millions of families feel every day and putting concrete tools in front of the people who can act on it. This brief is the start of a larger conversation about the "next playbook" and new ways to boost housing supply that we're committed to at the Center."
"Homeownership has long been one of the most reliable ways for families to build financial security," said Julia Gordon, Senior Fellow and author of the brief. "However, multiple forces have converged to squeeze out the starter home and close the door to homeownership for many people today. The good news is that we know what it takes to rebuild the supply of starter homes—we need to build more, repair what we have, and expand the types of homes families can actually afford. This brief lays out the path forward."
This brief identifies a five-part framework for federal action: BUILD more starter homes, REPAIR existing homes, EXPAND allowable home types, FREE UP supply, and FIRST DIBS for homeowners. It points to two federal actions that can be taken today to meaningfully expand the starter home supply:
Funding and implementing the 21st Century ROAD to Housing Act, which contains several provisions aimed at alleviating pressures that have led to the decrease in starter homes.
Passing the Neighborhood Homes Investment Act, a targeted tax credit with broad bipartisan support that would spur renovation and the sale of distressed properties in underserved communities, creating homeownership opportunities where they are needed most.
This is the first brief in The Next Playbook series from the Center for Affordable Housing Lending, and part of the Center's Housing Supply Research & Fellowship Program, made possible with the support of the Citi Foundation.
"For generations, homeownership has helped families build financial stability and create opportunity for the future," said Brandee McHale, Head of Community Investing and Development at Citi and President of the Citi Foundation. "As communities grapple with housing affordability and supply challenges, thoughtful research like this can help inform solutions that expand access to homeownership. We are pleased to support the Center for Affordable Housing Lending's work to advance dialogue and action on these important issues."