Entry-level homes seeing increase in popularity

Entry-level homes were pronounced “nearly extinct” by Builder Online last year, due to the decrease of construction of these homes since the recession.

However, this year, 45 builders on the 2016 Builder 100/Next 100 list, which is a premier list of the top 200 builders in the country, said that at least 50 percent of their business is entry-level homes, according to Builder. This was an increase of 25 percent compared to 2015 when only 36 builders reported significant entry-level home business. Are entry-level homes making a comeback?

To be fair, the number is still significantly lower than the more than 70 builders who were constructing entry-level homes in 2010, but the number is on the rise.

“The re-entry of the entry-level buyer has begun, but this group’s next moves will be gradual. Income challenges remain, and there are still relatively few new home developments that target this group,” said Metrostudy’s Brad Hunter.

“A key group that has been conspicuously absent from the entry-level housing market is Generation Y. There is general agreement that there are millions of ‘pent-up households’ because so many millennials are living with their parents and delaying getting married and starting their own families,” added Hunter.

Interestingly enough, 2016 data showed that the move-up home and luxury/custom home construction stabilized in 2015, as opposed to rising as they had been in past years. Regardless, move-up homes are still the front-runner, with 107 builders reporting that they make up at least 50 percent of their business. Entry-level homes followed, and then luxury/custom. Active adult, affordable and vacation homes were on the bottom end of the spectrum, the report said.