Opinion: Why ‘Starter’ Homes and Cars are Both Disappearing

Looking at recent trends in vehicle prices, Addison Del Mastro, in an article for Discourse, writes that “Much like the starter home, the starter car is on its way out.”

Del Mastro argues that “car prices are not just being driven up by scarcity, labor issues or other economic disruptions. They’re also escalating because of the removal of smaller—and less profitable—cars from manufacturers’ product lines.” In other words, Americans have less and less access to small, efficient cars, even if they want them. “For example, the Chevrolet Sonic and the Toyota Yaris were discontinued in 2020; the Hyundai Accent was discontinued in 2022; the Ford Fiesta, and now the Mitsubishi Mirage, have been discontinued in 2023.”

Comparing this decrease in access to small, affordable cars to the same phenomenon in the housing market, where affordable ‘starter homes’ are now nearly extinct, Del Mastro writes that “There’s no single explanation for this. Is it corporate greed or the unforeseen consequences of regulation? Maybe both.”

In the case of housing, zoning and other regulations have effectively criminalized some of the most affordable forms of housing such as apartments above businesses or accessory dwelling units (ADUs). “This is not exactly analogous to the starter car, but the result is the same. Automakers make more money selling larger cars, and regulations—safety regulations, but particularly the loophole by which SUVs escape higher fuel efficiency standards—skew the incentives even further toward large cars.”

While living in a walkable city with an excellent transit system may be a goal for many people, current conditions mean some people still need to drive. “[L]ife is hard, and there’s no reason for red tape and poorly crafted regulations to make it harder.” In Del Mastro’s opinion, “‘Deregulation’ is a dry and unsatisfying way of putting the answer, but it is nonetheless true that if we made it easier to deliver these bottom-rung products to market—by reforming zoning, for instance, or closing the SUV fuel-efficiency loophole—more people would do just that.”