The starter home is dying. AI could help save it #AI #housing

Added: 2026-05-05

[00:00:00]The American starter home is on life support, and one CEO says AI is the only thing that could save it. For decades, younger families purchased smaller, cheaper homes as their first step into building wealth. Now, the US is short nearly 4 million homes. Prices are sky-high, and zoning rules make it even harder to build anything affordable. I spoke to better.com CEO Vishal Garg, who told me the real problem is mortgages.

[00:00:25]Garg told me that the traditional mortgage industry relies on human loan officers who make a commission of 1 to 2% on mortgage deals. And those loan officers are less inclined to work with purchasers of starter homes because they're just not going to make as much money. And he told me there's only one solution to fix the problem. If customers use AI to process a loan, they could be saving $9,000, according to Garg. But the problem goes even further.

[00:00:51]Because loan officers don't want to give mortgages for starter homes, Garg told me that builders are less incentivized to build them now. Starter homes are important because they're how young families climb the first rung on the wealth-building ladder. And without them, first-time home buyers are being hurt the most, making the path to homeownership that much more out of reach.