Can Millennials Still Buy Homes? Starter Homes Say Yes

If you’re a millennial wondering how you’ll ever afford to buy a home, well you’re not alone and you’ve come to the right spot. In today’s market, home prices are beginning to fall, interest rates are still high, and the job market is rapidly changing. The dream of owning a home is really beginning to look daunting, but the truth is, this whole process can seem daunting as this purchase is not chump change. In this blog, we will discuss the powerful stepping stone to begin your home equity journey: the starter home. 

The American starter home has been a bungalow, a shotgun house, a rowhome. Credit...Library of Congress

A starter home is typically a smaller, more affordable house usually one that doesn’t have all the “bells and whistles”. Think fewer bedrooms, less square footage, and maybe some wear and tear. But it’s an entry point into the housing market, which helps you start building equity and hopefully generational wealth. Starter homes aren’t your “forever homes,” but I like to think of them as your launching pad. They’re for people like you and I who are trying to get their foot in the door and stop being the typical high renting millennial. 

Here’s the reality, millennials are in our prime home buying years, but the odds are stacked against us. We’re facing a tough job market, student loan debt, low housing inventory, and high mortgage rates. The average age of a first time home buyer these days is 40 years old. How is that fair? Especially when most of our parents purchased their first home around the age of 25. I encourage our generation to focus on starter homes as they offer a more affordable entry point and allow you to stop renting and start owning. Once you start building equity, you can leverage that into your next home. This is how we start climbing the property ladder.   

One of the biggest challenges today is the lock in effect. A lot of current homeowners locked in historically low interest rates (think 3% or lower) during the pandemic. Now that rates have risen to around 6-7%, those homeowners are choosing to stay put rather than sell and buy a new home with a higher interest rate. This means fewer homes, especially affordable ones, are hitting the market.

According to the 2024 DMAR Market Trends Report, inventory in the Denver Metro is still tight, even with an increase in listings toward the end of the year. Sellers are hesitant, and buyers are cautious, but motivated millennials are still out here making moves.

So if you’re interested in purchasing a starter home, where should you look? In Denver and the surrounding metro area, a few neighborhoods consistently show promise for first time buyers. Areas like Lakewood, Thornton, Aurora and Westminster still have homes under $450K, especially if you’re open to smaller square footage or a need for some updating. Remember, you’re not just looking for granite countertops, you’re looking for ROI. 

The key here is to work with an agent who understands what a good “starter” deal looks like. I can help you track down homes that may have been sitting on the market for a while, or one in up and coming areas that are still affordable and growing in value. These properties may not be flashy, but they have serious long term potential. 

Keep an eye out for: 

• Townhomes and condos - often lower in price and easier to maintain. 

• New construction in developing areas - sometimes you can get builder incentives.

• Homes with minor cosmetic issues - they scare off other buyers but could be your opportunity with some TLC. 

  
  

Let’s be real, buying your first home will not be perfect. It just has to be possible. As a starter home is your way of being, “In the game.” It’s not about making your dreams come true, it’s about taking the first step to building that dream. Yes, the market is tough. But you? That’s tough. If you’re ready to stop renting and start building, reach out to me if you need assistance discovering your launchpad. I’d be happy to help!