Starter Homes are Obsolete Due to New Home Fees and Regulations
By Dennis Sweeney, Executive Vice President HBA of Rockford
Recently there was an article in the New York Times, “Whatever Happened To The Starter Home?” I can answer that in one word, government, at every level.
Regulations imposed by all levels of government account for $93,870 or 23.8% of the current average sales price ($397,300) of a new single-family home, according to a study by NAHB published in May, 2021. That’s a national figure. A local builder shared with me that his upfront direct local fees to build a new house in a popular subdivision in this market were $23,000 before he started building. That doesn’t include the hidden costs that result from state and national land development and construction mandates.
So don’t buy a new house. Buy an existing one, like a starter home. The problem is that, as the price for new homes is inflated by regulations, the cost of existing homes is indirectly inflated by these regulations. The shift in demand for existing homes increases
their price.
The Rockford market used to be a great starter home
market because new homes were affordable too. The “Rockford Ranch” was and still is a popular floor plan, but now, at not-so-affordable a price as it used to be. The cost of an existing lot, the starting point for new home costs, hasn’t gone up. There are lots available all over Winnebago and Boone Counties and many available at a deep discount if you can afford to build a new home on it.