Is it still possible to buy a starter home in the Brockton area? Experts say yes, but for a price

When Quincy-based real estate agent Jeffrey Chubb entered the industry 14 years ago, he would tell first-time homebuyers they could likely secure a nice three-bedroom home with an hour or less commute into Boston for $300,000.

These days, he recommends a budget of $500,000 – maybe even $600,000 if you're looking for proximity to the city and a yard to call your own.

"$300,000, while it's a ton of money, is not necessarily a reality in our marketplace anymore," Chubb said. "You could go to Rhode Island or North Carolina or something like that, but it's just not going to happen here in the greater Boston area."

The U.S. is  experiencing a major affordable housing crisis, especially for first-time homebuyers or those looking to purchase a home ranging from 1,800 to 2,400-square-feet, the typical size of a starter home, according to experts.

"Since the prices have gone up so quickly, there's a lot of people that don't qualify," said Iva Sandra Andrade, a Brockton-based Realtor who joined the real estate industry in 2015.

"And now, with interest rates going up as well, it knocked out a bunch of people that could've qualified a couple of months ago."

Andrade said that the demand for homes in Brockton is so high that buyers are overbidding. When Andrade first started selling, Brockton was the hot new city for buyers looking for affordable homes. But now, prices are so high that they're starting to look in places such as Fall River and New Bedford.

Homes on any kind of sizable lot, with more than three bedrooms or with proximity to the city just aren't affordable for single shoppers, couples or young families, and "new South Shore builds, 100%, are not at entry-level pricing," Chubb said.

Are starter- and entry-level homes on the verge of extinction?

"They're not extinct, but they are endangered," said Robert Dietz, chief economist for the National Association of Home Builders. "It's much harder to find and build homes in smaller quantities in today's market given the demand, space challenges, and potential regulatory burdens. The submarket that’s been least supplied has been the entry-level home."

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Entry-level home inventory is limited

Homes ranging in price from $100,000 to $250,000, the national average cost for an entry-level home, have seen nearly a 28% decrease in inventory from a year ago, says the National Association of Realtors. On the South Shore it's almost impossible to find a home for such a price and not one that is move-in ready or sometimes even livable.

Smaller homes are in short supply. In 1999, 37% of newly built single-family homes were smaller than 1,800 square feet. By 2020, that share had fallen to 25%, Dietz said.

By comparison, in 1999, 66% of newly built single-family homes were smaller than 2,400 square feet while in 2020, that share had fallen to 57%.

Small, cottage-type homes on the South Shore  that were once a starting point for buyers have skyrocketed in popularity, especially those near the water, Ben Perrotta of Norwell-based Ben and Kate Real Estate said. First-time homebuyers are competing against older, wealthier people looking to downsize  to the same smaller homes, he added.

"The old cottages that you could get at a cheaper price in Plymouth. If it's near the beach, forget about it. You have people with money waiving appraisals, waiving inspections," Perrotta said. "Those older people say 'We can spare that extra $100,000, we're older, we're going into retirement, let's just do it' and true entry-level buyers can't always do that."

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Big demand and a small supply of homes are leading to fewer prospective buyers, said Rose Quint, the National Association of Home Builders' assistant vice president for survey research. At its pandemic peak last spring, 61% of prospective buyers were "actively trying" to find a home to buy, Quint said.

In Brockton, buyers used to flood in from Boston to buy affordable homes. But now that prices in Brockton are going up, buyers are pushed even farther south, where the supply of affordable homes is much higher.

"The buyers that no longer can afford Brockton are going to Fall River because there aren't enough of those properties anymore,"  Andrade said.

It's happening all across the U.S., Quint said. The share of active buyers in the Northeast region fell from 72% to 50% during the last year.

Home prices increased nearly 20% in major cities across the country in February, the S&P CoreLogic Case-Shiller national home price index says. The National Association of Home Builders said the cost of building materials has increased 33% since the start of the pandemic and the average 30-year mortgage rate hovers at 5%, the highest in a decade.

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Perrotta said he recently had an entry-level buyer lose out on a house to  a higher offer. When the winning couple went to the bank to secure their loan, interest rates priced them out of the home they'd agreed to buy.

"Housing prices are going to stop skyrocketing, they are going to level out. They're going to calm down and they're going to calm down quick," Chubb said. "But the issue is that the cost of borrowing has greatly increased. That's what is really affecting buyers right now."

The U.S. is also experiencing its highest inflation rate in 40 years, a combination that is also discouraging buyers, Quint told USA TODAY.

Many are now spending three months or longer trying to buy a home before giving up, Quint said. About 48% said their inability to find an affordable home was the number one reason they quit looking. The next highest reason was the inability to find a desirable neighborhood  (34%), followed by the inability to find a home with desirable features (31%), and being outbid by other buyers (29%).

Things are looking up

Andrade said that there could be a shift coming soon. Listings are staying on the market for longer now, forcing agents to lower prices by tens of thousands of dollars at a time. There was a major boom in the market during the pandemic as residents rushed to invest in real estate, but now the mood is changing.

"Now it's shifting and people are more cautious," she said. "I've gone through good phases of real estate ... but then you go through those months that you're dry and you don't sell anything."

Perrotta said he doesn't think even the high interest rates will send the market crashing like it did in 2008, and that it's still possible to find a good deal on a home.

"If you're an entry-level buyer and you see a great deal, jump on it," he advised. "I think timing the market is a bad idea for anyone, but if you're patient and keep your eye out, you'll be able to find something. "

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More homes are coming onto the local market than  at the height of the pandemic real estate rush, Chubb said. On April 25, his company recorded 2,900 single-family homes on the market in Massachusetts. Three weeks later, there were 3,600.

"Are you able to still buy a starter home? Absolutely. Do you have some headwinds blowing at you? 100%," Chubb said. "You have to make sacrifices like where you buy, but it's more feasible now than it was."

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With reporting by Enterprise staff reporter Christopher Butler. 

This article originally appeared on The Patriot Ledger: Brockton real estate market: Can you still buy a starter home?