Every morning, first-time buyer Anthony Valenti wakes up and then checks to see if any new homes have come onto the market in the Hartford, CT, area.

Valenti, 29, has been looking for a house to share with his fiancée since the spring of last year. The couple, both nurses at local hospitals, have been living with their parents to save money for their down payment.

They started their home search in the $300,000 range and quickly realized that there wasn’t much available at that price. Despite higher mortgage rates topping 7%, they adjusted their budgets and are now in the $400,000-plus range. But there aren’t many move-in ready, three-bedroom, two-bathroom homes with a two-car garage available.

“When the prices are at this point, you’re not getting your bang for your buck. Houses that are 1,200 square feet are going for crazy amounts of money,” says Valenti. “We want somewhat of a turnkey house. I don’t want to come home from a 12-hour shift and start laying tile.”

Valenti’s predicament is typical of what most first-time buyers are facing: Entry-level homes no longer come with entry-level prices.

First-time buyers are facing a housing market in which the median home list prices have shot up 38%, mortgage rates have roughly doubled, and the housing shortage has only worsened over the past four years, according to Realtor.com® and Freddie Mac data.

The monthly mortgage payment on a typical home has more than doubled since 2019. And first-time buyers are competing with cash-flush investors and wealthier, repeat buyers.

The competition from other buyers is particularly fierce for smaller, lower-priced starter homes—because, for many, that’s all they can afford. These entry-level homes have traditionally been most first-time buyers’ entrée to the American dream.

The traditional pattern: Buyers live in these cheaper homes for a while, building wealth that can be used to finance their next nicer/newer/larger home purchase, or to pass along to future generations.

But today, many first-time homebuyers who would have been able to purchase a starter home just a few years ago can no longer afford to do so. Even homes priced within the budgets of young couples can quickly become out of reach amid a bidding war.

But general consensus, just a few years ago, starter homes were generally defined as costing below $200,000. Today, they’re generally closer to $400,000, says Ali Wolf, chief economist of building consultancy Zonda. Buyers who don’t earn more than the median income in their area often can’t afford them.

“For people who haven’t already purchased a home, the chance of becoming a homeowner has gotten a lot harder,” she says. “A starter home may not be within reach for many Americans.”