First-time homebuyers are increasingly bypassing smaller, more affordable starter homes, opting instead to wait for their “forever home” and avoid the hassle of having to upgrade later in life.
Sixty-five percent of U.S. home shoppers expect their first property purchase to also be their last, while more than half of current Gen Z and millennial homeowners (52%) believe they will remain in the first home they bought for the rest of their lives, according to the latest BMO Real Financial Progress Index.
Meanwhile, 58% of nonhomeowners say the traditional approach of buying a starter home, only to swap it for a larger, more upscale house down the road, simply “makes no sense these days.” Rather than weathering the market multiple times, they prefer versatile properties that can adapt to their changing needs and life stages.
“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,” says Paul Dilda, head of U.S. consumer strategy at BMO.
Chris Grimes, a real estate broker at Corcoran Reverie in Nashville, TN, says he has been increasingly seeing first-time buyers bypass the traditional starter home route.
“I recently worked with a first-time buyer who did exactly that, and it was exciting to watch,” Grimes tells Realtor.com®. “The pride they felt in not just becoming a homeowner, but buying a home that even their parents could comfortably enjoy, was undeniable. It’s a big emotional milestone, and you really feel that when you hand over the keys.”
Realtor.com senior economic research analyst Hannah Jones notes that the waning popularity of starter homes is rooted in harsh market realities.
“Starter homes are increasingly expensive and challenging to come by, pushing more buyers to skip the ‘starter home’ rung on the property ladder altogether,” she says.
Grimes points out that forever homes come with a steeper learning curve than smaller, no-frills starter homes, which tend to be more basic and easier to maintain and update.
“With a forever home, especially one with higher-end finishes and complex systems, first-time buyers are suddenly responsible for maintaining things like high-grade appliances, specialty materials, and more intricate mechanical components,” says the agent. “I get concerned that when these items start to fail, the cost of repair can be a real shock to someone who hasn’t owned before and may not have budgeted for that level of upkeep.”
How one-and-done buying affects the market
The BMO survey explains that the pivot away from starter homes is closely tied to recent trends in U.S. homeownership, including its slower timeline, with the median age of the typical first-time homebuyer climbing to an all-time high of 40 in 2025, up from just 28 in the 1990s, according to survey data from the National Association of Realtors®.
“This 12-year shift compared to the early ’90s represents an entire wealth-building decade lost to renting,” says Jones. “Buyers are arriving at the market older, more financially prepared, and far less willing to compromise on a home they plan to stay in for decades, which is precisely why the forever home has replaced the starter home as the target.”
What’s more, many buyers begin the search for their first home only after starting a family of their own. The BMO index indicates that 2 in 5 house hunters currently on the market have at least one child.
For the housing market, Jones says the forever-home trend could diminish inventory turnover, which usually results from owners moving up and releasing their starter homes as new supply for first-time buyers, typically couples or young families.
“Breaking this cycle could deepen the supply shortage as fewer households move around,” says the analyst. “However, how this dynamic affects different parts of the market will depend on how demand for starter homes compares to demand for forever homes, and if supply is able to keep up.”
In Nashville, Grimes says most of the city’s recent development has been geared toward larger, higher-priced “mass appeal” homes that are designed to sell quickly and deliver higher margins for builders but are out of reach for many first-time buyers.
“The result is a shortage of what we used to think of as entry-level housing,” says the agent. “When first-time buyers do skip the starter home and stretch into a nicer forever property, it can unintentionally reinforce this cycle. Builders see continued demand for higher-priced, mainstream, and upscale products, and there’s less incentive to bring genuine entry-level communities to market. Over time, that creates a gap: fewer options for the next wave of first-time buyers who want new construction but don’t have the budget to go all-in on a forever home right out of the gate.”
Grimes predicts that if people truly remain in the same home for most of their lives, there will be longer holding periods and tougher entry into the market for rookie buyers.
Redefining the American dream
The report shows that nearly three-quarters of responders say owning a home remains a major life aspiration, but most are in no rush to make a move: Just 14% of current renters plan to buy property within the next year, down from 17% in 2025.
The majority of survey participants say they are waiting for interest rates to drop before deciding to jump into the market.
“The American dream of owning a home is still alive and well, even if the market is presenting challenges that require new financial strategies for many to achieve this dream,” said BMO’s Dilda. “When prices and rates are high, your best offense is a good defense: a smart budget and a financial partner who can review your full financial picture to help you secure the best terms within your means so you can get those keys in hand.”
Since buyers anticipate buying a home just once, the majority of younger Americans put a premium on multipurpose properties. They are increasingly seeking homes that offer workspaces, rental potential, and the flexibility for multigenerational living.
Based on the index, more than two‑thirds of millennial and 75% of Gen Z homeowners say it was important to buy a house that could accommodate parents or grandparents as they age, while 60% of Gen Z and millennials plan to invest in changes to their homes to generate passive income, either through long-term tenants or short-term rentals.
What keeps buyers on the sidelines?
While the interest in homeownership remains high, 55% of nonowners say buying seems unattainable in their lifetime, and this pessimism is not limited to low-income individuals: Nearly half of renters under 40 earning at least $100,000 a year say they are less confident they will ever own a home than they were five years ago.
According to the report, key factors keeping would-be homebuyers on the sidelines include high caregiving costs, a reluctance to dip into their retirement savings for a down payment, rising home insurance costs, and climate risks.
Among young buyers grappling with affordability headwinds, the majority say they would embrace a long commute for their dream home, would relocate to a more budget-friendly market if remote work allowed that, and would co-buy with friends or family.
In a sign of AI’s expanding role in real estate, 72% of homebuyers say they will leverage the new technology to streamline the buying process, from learning about mortgage options and interest rates to calculating spending and parsing legal and regulatory requirements.
