The concept of the starter home could soon become passe, according to the latest BMO Real Financial Progress Index report.
The report, which polled 2,500 adults from Feb. 17 to March 18, found 65% of buyers expected their first purchase to be their forever home. Meanwhile, 58% of non‑homeowners believed buying a starter home and upgrading later simply “makes no sense these days.”
Many buyers are purchasing their first home only after starting a family. Two in five prospective homebuyers currently in the market have at least one child.
“With more first-time homebuyers entering the market later in life, they are no longer looking for a starter home, but rather a house that matches their life stage and family needs,” said Paul Dilda, head of US consumer strategy at BMO.
Furthermore, the report found younger homeowners are prioritizing homes that can serve multiple purposes. With caregiving pressures rising, 66% of millennial homeowners and 75% of Gen Z homeowners said it was important to buy a home that could eventually accommodate parents or grandparents. Also, 60% of both Gen Z and millennial homeowners planned to invest in additional space to generate rental income, either through long‑term tenants or short‑term rentals.
Still, 55% of non‑homeowners felt buying was unattainable in their lifetime, with nearly half (49%) of renters under 40 earning at least $100,000 a year saying they were less confident they will ever own a home than they were five years ago. Among the obstacles sidelining prospective buyers are the financial aspects of caregiving responsibilities, prioritizing retirement savings over property purchases, and rising home insurance costs.
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