Price correlates more with location than size, at least around here. "Starter home" prices don't start to show up until you get to the wrong end of a 1-hour commute. And most of those less-expensive houses are physically larger than mine, because no one has built houses under 1,000 square feet for decades.
In my metro (DFW), the neighborhoods of houses built in the 60s/70s/80s are dwindling because nobody will buy them. There are neighborhoods of perfectly fine ~200k houses just sitting on the market for months because "ewww, I don't want to live in Grand Prairie/Garland/Irving". Then those same people pine over the newly built $500k mcmansions in Frisco or the $2m mansions in Highland Park and lament about how they'll never be able to afford being a homeowner. Do you see the disconnect?
>Smaller is "established" and everyone with money wants to live in those established neighborhoods, not the suburban sprawl 50m from the city center.
It's not some secret that desirable location is a huge driver of property prices, and being closer to a city center is more desirable. My parents knew this 50 years ago, which is why even though they loved living downtown in an apartment, when it came time to buy a house they moved out to the suburbs because that's where the affordable starter homes are. Then, when they became more established in their career and built up some wealth, we moved a little bit closer to the urban center. That's just how it works. But these days, millennials seem to think that they are automatically entitled to live downtown in a 4 bedroom, newly renovated/constructed house with full amenities next to the main park and hip shopping center and zero crime while on an entry level salary. I understand that, and I wish I could have that too, but that's just not how the world works (nor how it has ever worked).
This is another reason people are burned on "starter homes". You can't get your money out if you need to move. Cheap houses are in undesirable areas and you can't sell them, better to rent.
An alternative hypothesis would be that suburban development patterns don't work generally. I don't know anything about the DFW area specifically, but it's possible people don't want to live in those cheaper areas because they are poorly laid out and the infrastructure maintenance is higher than the revenue the area can generate. This may manifest itself in different ways (poorer schools, sidewalks, amenities), but one way or another, these neighborhoods are signaling decline.
Many first and second generation suburbs are in death spirals because of this problem. Buyers who can afford it chase newer development because the areas have an optimistic future and no obvious maintenance problem. Unfortunately, many of those areas will be in the same spot 30 years down the line.
> But these days, millennials seem to think that they are automatically entitled to live downtown in a 4 bedroom, newly renovated/constructed house with full amenities next to the main park and hip shopping center and zero crime while on an entry level salary.
I'm not saying there aren't some entitled people, but I haven't encountered this attitude very often - it seems like there are plenty of other reasonable explanations for what is driving consumer choices without stereotyping.
I think the quality of the local school drive home prices considerably.
Why not move into a cheaper starter home now, and then once your child is about to start school (and you presumably have gotten some raises and built up some wealth), move into a more expensive house in the better school district? That's what the entire concept of "starter home" is about.
So now the conversation becomes: it's not that this person can't afford housing, it's that they can't afford housing that has an amenity they won't even use... which makes the entire situation seem even more silly.
The properties of wood and physics have remained surprisingly constant over the decades.
I would have not much of a problem living in an old place. I'd have a lot of skepticism to conquer about purchasing one.
"Starter homes" for young people is the stuff that was built 30-40 years ago that hasn't been updated. So they are buying those mcmansions because that's what was built in the 80s-90s-00s. The really nice, older urban areas with housing built before that is way more expensive in absolute dollars.
Smaller is not cheaper in most cases. Smaller is "established" and everyone with money wants to live in those established neighborhoods, not the suburban sprawl 50m from the city center.