New analysis examines why the traditional starter home no longer functions as a reliable entry point for first-time homebuyers.

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WASHINGTON, D.C. – New analysis from Prosperity Now, Nestment, and Next Belt Strategies examines why the traditional starter home has become increasingly misaligned with today’s housing market realities, even for households with stable incomes and strong credit.

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The report, Homeownership in America: The Starter Home Is Dead. Now What?, finds that rising prices, constrained supply, and evolving household financial structures have fundamentally altered how first-time buyers enter homeownership. Rather than reflecting a decline in aspiration, the research suggests that long-standing entry points no longer function as intended under current conditions.

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Drawing on market data, practitioner insights, and real-world case studies, the report documents how buyers are adapting by navigating alternative pathways into ownership. These include co-buying, shared equity and shared appreciation models, house hacking, cooperative housing, and rent-vesting strategies. While historically considered niche, the research finds that these approaches are increasingly serving as primary entry points for first-time buyers in practice.

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“The buyers we’re seeing today are not disengaging because they lack motivation or financial discipline,” said Marisa Calderon, President and Chief Executive Officer of Prosperity Now. “They’re responding rationally to a system that was designed for a different market. This research helps put shared language around what practitioners and households are already experiencing.”

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The analysis also highlights a growing mismatch between buyer timelines and industry structures. Many households require extended periods of preparation and guidance before purchasing, while housing finance and real estate systems are largely designed around short transaction cycles. This misalignment can leave otherwise prepared buyers without sustained support during readiness-building phases, contributing to disengagement even among credit-qualified households.

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“The dream of homeownership revolves around stability and belonging as much as wealth building. We've seen over the years how each generation redefines the meaning of family, relationships, even success,” said Niles Lichtenstein, Co-Founder and Chief Executive Officer of Nestment. “From our work with first-time buyers, it’s clear that the challenge is not access to products alone, but access to navigation. When buyers understand their options and how different pathways work over time, outcomes improve, even within existing market constraints.”

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Importantly, the report does not argue for replacing existing systems or practitioners. Instead, it surfaces shared patterns already visible to housing counselors, lenders, and community-based organizations, and offers a common framework for understanding how buyers are experiencing the market today.

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“Many of the tools in use today were built for a housing market that no longer exists,” said Jeremy Potter, Principal at Next Belt Strategies and Co-Host of the Housing Insiders podcast. “This analysis is about recognizing where systems have become misaligned with household realities and identifying where potential buyers have adapted so the system can respond."

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The report also considers implications for capital markets and policy. In markets where affordability challenges have become structural rather than cyclical, incremental demand-side tools alone have not restored broad access to entry-level ownership. The analysis suggests that recognizing and responsibly supporting new entry pathways, including those that incorporate risk-sharing and phased equity accumulation, may be essential to expanding durable access to homeownership over time.

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“Homeownership in America: The Starter Home Is Dead. Now What?” is available to download here.  

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About Prosperity Now: Since 1979, Prosperity Now has been a trusted leader in strengthening financial security, expanding access to capital, and ensuring economic stability for businesses, families, and communities. Learn more at www.prosperitynow.org.

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About Nestment: Nestment was founded in 2021 to guide the next generation of first-time homebuyers through the homebuying process with clarity and confidence. The company combines a dedicated homebuying coach, a trusted network of real estate agents and lenders, educational resources, and AI-powered tools to support buyers from their earliest questions through closing. Their homebuying platform helps first-time buyers to achieve homeownership through accessible, creative pathways and wealth-building strategies. Nestment is backed by leading venture investors including Protofund, IDEA Fund Partners, and mission-aligned funds, namely, Vamos Ventures, Concrete Rose, and The MBA Fund. Read more about how Nestment is revolutionizing the future of homeownership at https://www.nestment.com/.  

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About Next Belt Strategies: Next Belt Strategies is a consulting and advisory firm focused on innovation in the real estate, mortgage and title industries.  

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