Starter Homes

Why We Are Doing This

In the U.S., the notion of a “starter home” arose in the 1930s – via innovations in the lending and federal insurance space that made housing affordable for the white middle class – and boomed post-WWII, driven by suburban development.
Since then, starter homes have generally been considered a young adult’s first residence for up to five years. These homes are usually smaller and often require compromising on certain desirable features to maintain affordability. Boston’s supply of starter homes is not meeting the demands of today’s middle-income and young families. U.S. Census data tells us the median annual income of this group, where the household head is between 25-44 years (44% of the city’s population), is approximately $125,196. Households with that income could potentially afford a home with a sales price between $500,000 - $600,000. However, as of October 2024, only five percent of new market-rate (unrestricted) two-bedroom condominiums that completed construction in 2024 were sold for $600,000 or less.
Middle-income households face significant challenges in today’s housing market. Their incomes often fall short of covering market-rate housing in areas close to jobs and essential amenities, yet they may earn too much to qualify for over 3,000 income-restricted homeownership units currently built or under construction in the City of Boston.

What We Are Doing

The Housing Innovation Lab brought together Boston-based housing development, design, and finance experts to think creatively about new or improved real estate concepts/prototypes and seed new ideas for a “starter home” affordable to today’s middle-income Bostonians.

At the end of the sprint, proposals were presented to and evaluated by Boston’s Chiefs of Housing, Planning, and the Inspectional Services Department, as well as the Director of the Boston Home Center, the Director of Neighborhood Housing Development, and the Director of Policy Development and Research to inform the city’s homeownership development strategy.

Lessons Learned

By de-risking the development process, we can spur the development of modest starter homes.
Key de-risking factors include:
- City-led community engagement around new housing development
- City-approved typologies and minimal design review
- As-of-right zoning
- Free land with shorter-term deed restrictions
- City marketing to pre-approved, income-eligible buyers