A new report from Prosperity Now, Nestment, and Next Belt Strategies examining why the traditional starter home no longer functions as a reliable entry point, and how first-time buyers are navigating today’s market instead.  ‍‍

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For much of the last century, the starter home served as a practical bridge from renting to owning. It offered an attainable first step that allowed households to build equity, stability, and long-term financial security. Today, that pathway no longer functions as intended.

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Home prices have outpaced wages, entry-level supply has shifted toward higher-margin housing, and competitive market dynamics increasingly disadvantage first-time buyers, even when they are credit-qualified and financially prepared.

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This report examines how those conditions have altered the first-time homeownership landscape. Rather than signaling a decline in aspiration, the data suggest a structural misalignment between long-standing entry models and the realities households face today.

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Drawing on market data, practitioner insights, and case studies from across the country, the report documents how buyers are adapting. Many are entering homeownership through alternative pathways that allow them to build equity, manage risk, and navigate upfront constraints within existing systems.

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ALTERNATIVE PATHWAYS

The report explores several ownership pathways that are already in use, including:

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• Co-buying, where multiple borrowers jointly purchase a primary residence using existing mortgage frameworks. 
• Shared equity and shared appreciation models, which incorporate third-party capital alongside a traditional mortgage, with returns tied to home value over time. 
• Cooperative communities, which use collective ownership structures to lower upfront barriers and distribute ongoing costs. 
• House hacking, where rental income from small multifamily properties offsets ownership costs for owner-occupants. 
• Rent-vesting, where households build equity through ownership of a non-primary residence while continuing to rent where they live. 

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These approaches vary in structure, suitability, and risk, but together they reflect how households are navigating a market that no longer offers a single, linear path into ownership.

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