Do starter homes still exist? According to North Jersey realtors, the answer isn't so clear

Once upon a time, first-time buyers entered the housing market under the notion that they'd be looking for a "starter home": A smaller, more affordable property to hold them over until they can eventually buy their dream home that better suits their family.

But, does the concept of a "starter home" still exist today? Despite the elevated interest rates, rising home prices and low inventory that has plagued our current market, they do — but not in the same way as they once did.

They're not bought as starter homes, but that doesn't mean they won't become them

"I do not believe that buyers are purchasing a home with the intent that this is 'temporary,' and that they are simply going to test it out for a short period of time," said Suzy Minken, a realtor with Compass in Short Hills. "But, to say that buyers are not looking for a starter home could imply that buyers might not become 'move-up' buyers in the future."

Minken said that it has become rare for buyers to come to her specifically with the intention of purchasing a starter home. Instead, buyers come to her simply looking for a home — without any specifics like the term "starter" — or explicitly express that they're looking for their "forever home."

While she said that she doesn't think the concept of a starter home is really in the vocabulary of home buyers today like it was in the past, it doesn't mean that the home won't become their starter home down the road.

"There are plenty of buyers who are indeed 'move-up' buyers. I think these 'move-up' buyers are actually 'accidental move-up buyers' who most likely never planned that the home they bought years earlier was their starter home," Minken said. "In retrospect, these buyers purchased a starter home and are now looking to 'move-up.'"

Similarly, John Barone, a realtor with Coldwell Banker Realty in Ridgewood, said that it has become difficult for homebuyers today to plan for the future. Between having to move closer to family, job relocations, unexpected family changes and other circumstances, it's hard for people to know whether they'll stay in one place for the rest of their lives.

"Life happens, right? Let's say it's just a couple and they purchase a two-bedroom house, but next thing you know their family is growing. You can't really predict what the future has in store, so you basically have to take it one step at a time," he said. "I would hope to say it would be a long-term purchase, but you never know."

Or, when buyers do seek out starter homes, they're not necessarily single-family homes

When buyers are specifically seeking what could be considered a "starter home," though, it is no longer necessarily a small, single-family home. Instead, Barone said townhouses, condos and apartments are becoming the new starter home.

"Today, first purchases are typically becoming either apartments or condos or townhouses," he said. "I'm not seeing too many first-time buyers purchase a single-family home."

Homes begin as starter homes, but have to be transitioned into forever homes

Since interest rates have remained elevated and home prices are rising, those who purchased what they thought was a starter home years ago have had to transition their property into a forever home.

"Factors such as mortgage rates, relatively low housing inventory and rising home prices could impact a homeowners' decision to remain in their home longer," Minken said. "This, of course, contributes in part to the 'housing gridlock' that we are experiencing today."

Because of things like this, Barone said he always recommends that buyers consider properties that they can expand down the road. By doing this, it allows for room to grow in the event that unpredictable market variables keep them from being able to purchase a larger home down the road.

This could also apply if a buyer purchases a smaller home to start with, but ends up falling in love with the location, Minken said. This adds flexibility to the property, so it doesn't need to be considered a "starter" or "forever" home.

"If you're looking to possibly stay in the home long-term, and it's a smaller house, you would probably want to find a home with a decent sized lot where you would be able to put an addition on if you wanted to," Barone said. "also, if it has a full, unfinished basement, that just gives you more opportunity to finish it and make more living space out of the home."

In the end, buying a home isn't as cut-and-dry as it was in the past. So, both Minken and Barone said all you can do is take the process one step at a time.

"It's a very challenging time to purchase a home," Barone said. "You just have to be very creative and have a lot of patience in this market."

Maddie McGay is the real estate reporter for NorthJersey.com and The Record, covering all things worth celebrating about living in North Jersey. Find her on Instagram @maddiemcgay, on X @maddiemcgayy, and sign up for her North Jersey Living newsletter. Do you have a tip, trend or terrific house she should know about? Email her at MMcGay@gannett.com.

This article originally appeared on NorthJersey.com: Do starter homes still exist? Here's what NJ realtors said