Starter homes on Long Island becoming 'endangered species'

Tom Postilio and Mickey Conlon have seen many housing trends in their combined nearly 45 years in the real estate industry.

A current one that's mostly universal — save for the adventurous, handy and patient — is most buyers want a spacious, updated house, needing no immediate upgrades.

However, in a highly competitive market like Long Island, experts say many buyers don't get what they're looking for without sacrificing some wish-list items — or their budgets. But even those traditionally considered ''starter houses'' — with small, dated kitchens, a single bathroom and maybe some storage space — are hard to come by on the Island and can come with high price tags.

The starter home is becoming an endangered species.

— Mickey Conlon, of Compass

"The starter home is becoming an endangered species," said Conlon, who works as a team with Postilio at Compass, both as licensed associate real estate brokers.

While "there are certainly people living in outdated houses," Conlon said, many buyers would prefer to spend more and get a house that's already done and large enough to grow into.

"It takes out a lot of the stress and uncertainty," he said. "It gives them the ability to grow into the house rather than settle and have to buy bigger later."

Few starter homes, fewer starter prices

A traditional starter house usually has

2 to 3 bedrooms

and

1 bathroom

Like Postilio and Conlon, other agents see that with the realities in Long Island's low-inventory, high-demand housing market — and buyer tastes for renovated spaces — fewer people are interested in buying traditional starter homes.

Part of that reality is that home prices have risen in recent years, including for starter homes, which was much of their appeal.

Home sales in Nassau and Suffolk counties set records in August, Newsday reported.

Nassau's median sale price in August was $875,000 — up 5.4% from August 2024, while Suffolk's was $714,000 — up 5% from a year ago.

We wound up with what we wanted in the end, but the market was absolutely crazy to the point that some people would find it discouraging to keep looking.

— Jonathan Dutton

Two years ago, Jonathon Dutton and his wife, Arianna, bought their first house. The three-bedroom, two-bathroom home in Farmingville cost them $525,000.

The 1,500-square-foot ranch was in their budget, only slightly more than they initially wanted to spend, Dutton said.

They were attracted to the home in part due to its "turnkey" nature, aside from a few projects needed in the yard.

"Everything was redone and beautifully put," said Dutton, 28. It included their must-haves of central air conditioning and natural light, but didn't have a basement, which they would have preferred.

The renovated kitchen and bathrooms were just what the young couple wanted, both of whom work in the busy medical industry, he as a radiologic technologist, she as an ultrasound technologist — and now with a 15-month-old son.

Like other first-time homebuyers, the couple was surprised at how competitive the market was, finding themselves in bidding wars on other houses before buying theirs, intending for it to be a long-term home.

Dutton credited their real estate agent, James Hogan, at Douglas Elliman, with being very helpful "in finding us what we wanted for how much we wanted to spend."

"We wound up with what we wanted in the end, but the market was absolutely crazy to the point that some people would find it discouraging to keep looking," Dutton said.

They were considering lower-priced houses that needed work, but between busy work schedules and planning to have children soon, they eschewed homes that would have been projects.

And even those houses were priced similarly to the one they bought, so it didn't make sense to go that route, Dutton said.

But their home may end up being a starter house, after all.

"We love our home, but we do want more kids and might need more space eventually," Dutton said.

Focus on priorities, not paint colors

Don't look for the perfect, altogether put-together home — look for the meat and potatoes home to get all you need to start out with, and you can build on it.

—Tina Louise Vespoli, of Douglas Elliman

Like the Duttons, some buyers don't intend for their purchase to be a starter home.

Tina Louise Vespoli, certified buyer representative at Douglas Elliman, has been in real estate for 27 years. She said most of her buyers — whether they're first-timers or veterans — "don't buy starter homes."

Instead, she sees starter homes being bought by investors and flipped for a profit — giving homebuyers the updated house they're seeking.

Instead of focusing on a specific type of house, Vespoli advises people looking in a competitive market, especially those with a smaller budget, to search for what she calls the "meat and potatoes" — the homes that have enough space and are clean and have been well cared for, even if the kitchen cabinets need a new coat of paint.

She also recommends buyers consider houses that may be small, but can be expanded later.

"I feel badly for people trying to come in [the market] because starter homes are really nonexistent," she said. "Don't look for the perfect, altogether put-together home — look for the meat and potatoes home to get all you need to start out with, and you can build on it."

Don't fear the fixer-upper

Elizabeth Lowe, a licensed associate real estate broker with Douglas Elliman, said, "I think the definition of what a starter home is has probably changed."

When she started in real estate about 15 years ago, Long Island buyers could find a house for under $300,000, what people would traditionally think of as a starter house: two or three bedrooms, one bathroom, maybe a garage, maybe a basement.

Today, "those homes are very few and very far between," she said.

Most first-time buyers are spending $600,000 to $700,000 for their homes, she noted, making it less of a starter home and more a long-term one.

She, too, sees the few smaller, dated homes being bought by investors to renovate and flip for a profit.

But it doesn't have to be that way, she says.

"When I bought my first house, I bought something that needed a ton of work and I sold it for a good profit" years later, she said.

She has good company in James Hogan, also a licensed real estate salesperson for Douglas Elliman.

He is bullish about buying fixer-uppers — often considered starter homes — and renovating them. He has done so on several properties and doesn't see why more homebuyers don't do it.

Hogan understands that buyers "want the dream house that's renovated," but argues they can do it themselves or hire contractors to make the renovations for less than they think.

He recommends buyers taking 203(k) loans, Federal Housing Administration loans backed by the government that combine the cost of buying a house with the cost of renovations into a single loan.

While like the other agents, he sees fewer starter home options, when they do come around, buyers will find they have advantages.

As Hogan sees it, if a buyer purchases a home for $500,000, and spends $80,000 on well-done renovations that add value to the property, they now have a house worth $700,000.

"Why give the profit to the investor when you can make the profit for yourself?" he asks. "You can get such a better deal on a house that needs renovation."

People shy away from a house with ugly countertops and cabinets "and that's where people should lean in. You can get the materials yourself from Home Depot. Paint goes a long way too, and you'll have a remodeled house for a fraction of the price."

Life throws curveballs, but get as much house as possible for your foreseeable needs.

— Tom Postilio, of Compass

Instead, buyers pay top price for a completely renovated house. 

"I'm seeing people becoming house poor to get the center island to impress their friends," Hogan said.

If he were a first-time buyer, "I would absolutely be buying a house that needs work with a 203(k) loan."

Postilio and Conlon, the Compass agents, said if they could go back and do it all over again, they would both buy smaller homes that need updates, and live in them for a while before renting them as investment properties.

"Think about your future, what does it look like?" Postilio asked. Will the buyer want to stay in the area for work or are they thinking of relocating? Do they want to have lots of kids?

"Life throws curveballs," he said, "but get as much house as possible for your foreseeable needs."