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The Return of the Starter Home.


As a millennial, I can attest to our generation getting a bad rap. The whole narrative that we spend our money on avocado toast instead of savings is as grossly unfair as it is gross. However, as a manager of people for more than 15 years and a real estate broker, I can attest that many of us millennials do indeed want the forever solution right now. We've wanted the office before we justified the job, the high salary without the experience, and yes, the forever home first.


I can't tell you how many conversations I've had with single people insisting they need three bedrooms—one for them, a second for their work-from-home or workout space, and a third for their guests. They need a minimum of 1.5 baths and a fenced-in yard for Fido. And they want all of this in a highly desirable neighborhood now! Bonus points if we can find parking, a modern kitchen, great appliances, and high-end finishes. In short, they want their first home to tick every box.





There's a reason for this. People are saving more and buying later in life. But here's the issue: they often lack enough savings to get their down payment high enough to lower their monthly mortgage payment low enough because they don't have equity from a prior real estate investment.


This isn't the rule, but it's by no means a rare exception. It happens all the time. While they could have owned a home and accrued equity, they rented instead because they were unwilling to compromise early to get what they wanted later. Unwilling to go outside that top neighborhood, unwilling to cross rivers, unwilling to share a space with roommates, unwilling to lose that extra bedroom—in short, unwilling to start with a starter home and work up. But that is about to change in a big way.





A Shifting Market

The average home sale price in New Orleans, specifically New Orleans Metro, hovers in the mid $300K range—between $340K and $360K, lower than the national average. For context, the average home price in the United States in the second quarter of 2024 was $513,100, according to the Federal Reserve Bank of St. Louis​ (FRED)​. This disparity highlights the relative affordability of the New Orleans market compared to the national average.


However, increased interest and insurance rates deter many buyers from purchasing their first home here today. But, it's also causing many buyers to rethink the home, not the buy.


How do we know this? We're seeing more requests for income-generating homes, homes in up-and-coming areas, and homes that need a little more work than ever before. Younger buyers are also more open to looking just outside the hot downtown neighborhoods in New Orleans and are even searching the suburbs.


[It's worth noting that Louisiana’s median home price last fall was "just $255,000 for several reasons. Land in other areas of the state is inexpensive and plentiful, and material and labor costs for housing are low." According to Forbes, this made Louisiana the 5th most affordable state to purchase real estate in the nation.


Ask about opportunity zones in Jefferson and other counties that may make you eligible for a 0% downpayment.]





National Trends

It's not just beginning to happen here; it's already starting to happen on a national stage. First-time homebuyers across the country are compromising and purchasing older homes, homes just outside urban centers or that are smaller with fewer amenities. According to a survey by Opendoor, more than three in four first-time buyers are now purchasing with someone else, whether it's a romantic partner or a friend, to split costs and make homeownership more achievable​ (Real Simple). Additionally, many buyers are moving to less desirable areas or purchasing older homes that may require more work.


The 2024 Home Buyer Report by NerdWallet indicates that younger generations, including millennials, are the most likely to plan on buying a home in the next 12 months. However, they are setting their sights lower, with hopes to spend under $300,000 on average, well below the national and even New Orleans Metro median home price. This trend is driven by affordability concerns and the desire to manage mortgage payments more effectively​ (NerdWallet: Finance smarter).


In 2022, first-time millennial buyers began showing a willingness to take risks, with many purchasing homes sight unseen or buying fixer-uppers. This trend continues as affordability and financial pressures drive more buyers to compromise on their ideal home in favor of one that fits their budget and long-term goals​ (This Old House).




Starter Home Options at Cool Murphy Real Estate

At Cool Murphy Real Estate, we have several starter home options that fit the bill and we're adding more listings on the regular. Current listings as of June 2024 include:





1325 Bartholomew St: This is a great 3-bedroom, 1.5-bath home with room for Fido and even gated parking for multiple cars. It's located just three blocks outside the historic Bywater neighborhood for just $300K! The seller has already invested a newer roof, new HVAC, and other more pragmatic features to help keep your maintenance costs and mortgage payments low—compromise on being three blocks outside this hot neighborhood and gain in the long term.





 


900 Bartholomew St: Just down the street, this two-bedroom, two-bath condo is listed below the national average at $380K and is located in the heart of Bywater. It has loads of amenities, including a pool, parking garage, gym, dog run, mailroom, and the flexibility to short-term rent per the current condo rules and commercial zoning. Plus, no stress and no worries as you don't need to worry about maintenance or even furniture. All the furniture comes included with a strong offer. Compromise two beds instead of three and live in a totally turn-key condo, in the heart of a hot neighborhood, save on furniture, and gain a lot.



 


2125 St Roch Ave: Listed below half the cost of the average home in New Orleans at $149K. It's a two-bed, one-bath single-family home with a yard in the hip St Roch neighborhood. Compromise on a bed and half bath and the shotgun layout, and you can get into homeownership for what many people in the city pay for rent and have a whole home in good shape to yourself with good neighbors and easy parking.




 


Lastly, before you say, "St Roch? What's that?" Read this blog about the neighborhood (https://www.coolmurphy.com/post/is-st-roch-new-orleans-right-for-you). Or before you ask, "St Roch, is that place selling?" Well, sure, our 1616 Arts Street listed and went pending quickly, and so are many others around it moving as well. Sorry, that one is gone pecan at just under $400K for a stunning renovation with all the fixings: 3 beds, 2.5 baths, parking, and a yard. But we are taking backup offers. Inquire now!






 

Embracing the Starter Home

The return of the starter home signifies a pragmatic approach to homeownership, where buyers are more willing to compromise on certain aspects to get their foot in the door. This shift can lead to increased equity and financial stability over time, ultimately allowing for the purchase of a dream home down the line.


Simply put, investing in a starter home is investing in yourself.


Are you considering buying your first home? Then, consider the long-term benefits of starting with a shorter must-have list. It's not just about where you start but how you can grow from there. Whether it's a cozy bungalow in an up-and-coming neighborhood, a fixer-upper with great potential, or a cozy jewel box, embracing the starter home can be both wise and rewarding.


Stay informed about your options, and don't hesitate to reach out with any questions. We're here to help guide you through the process and find a home that suits your needs and budget.


In the meantime, subscribe for more content if you aren't already, and be sure to join our Facebook group, Living in New Orleans - https://www.facebook.com/groups/homeinneworleans, for more trends and ideas on enjoying your home in this amazing city. And when you're ready to sell, give us a call early so you don't waste a cent you don't have to. We've got you covered.



 


Voted Neighborhood Favorite by Nextdoor, Team Cool Murphy is a top-producing, licensed real estate team based in New Orleans, brokered by Cool Murphy, LLC.


Celebrated for her next-level creative approach to real estate, Elisa Cool Murphy is an award-winning, top-performing real estate broker in New Orleans and the founder of Cool Murphy Real Estate.


Contact Her -

Facebook: @homeinneworleans

IG: @coolmurphynola

YouTube: @coolmurphynola

phone: 504-321-3194



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