Are starter homes in major cities just a myth as home prices continue to rise? Surprisingly, there are 15 major U.S. cities where starter homes can be found for under $230,000, on average, according to a recent analysis conducted by Five Star Painting, a painting services company. This average price is significantly lower than the U.S. median home price of $431,000, as reported by the most recent U.S. Census Bureau data.
Starter homes are typically smaller and more affordable houses, suitable for first-time homebuyers or individuals with lower incomes. Five Star Painting’s study defines starter homes as single-family homes, townhouses, or condos that are 1,850 square feet or less. The analysis excluded mobile homes, land lots, and multi-family home listings.
According to Zillow’s affordability calculator, individuals would need incomes of around $56,500, excluding other debts, to afford a $230,000 home with a 10% down payment. However, regional variations in home prices mean that buyers with lower incomes could potentially afford a starter home in certain areas.
Based on Redfin real estate listings of the 50 largest U.S. cities, the following 15 markets had the lowest average prices for starter homes as of August 2023:
- Detroit: $83,500
- Cleveland: $109,650
- Memphis, Tennessee: $142,450
- Milwaukee: $142,900
- St. Louis: $149,500
- Hartford, Connecticut: $164,474
- Birmingham, Alabama: $166,055
- Buffalo, New York: $179,900
- Kansas City, Missouri: $187,950
- Louisville, Kentucky: $199,615
- Baltimore: $202,289
- Indianapolis: $211,517
- Pittsburgh: $214,589
- Cincinnati, Ohio: $219,900
- Oklahoma City: $227,705
Despite some recovery from bankruptcy, Detroit’s real estate market still offers relatively low prices compared to the national median as the city struggles with a declining population and a higher number of distressed home sales. Similarly, Cleveland, a rust-belt city with a longstanding decline in population, also boasts lower home prices compared to the national median.
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