Interesting topic. I think there are several factors to weigh, but as others have said I think more risk of losing players to stakes being too high than too low. Plenty of threads out there on how hard it is to find/keep enough players for a regular game.
I started my monthly neighborhood game at $20 buy-in. The game is unlimited rebuys but there are usually only a few rebuys per night. Early on I was doing 100 chips per person with all chips being same value with blinds of 1/2 (chips). That essentially made every chip worth $0.20, blinds of $0.20/$0.40, and starting stacks at 50BB. People would call every hand with any cards and make comments about how calling a 10 chip bet (10% of their starting stack) was $4, a "cup of coffee". I felt like that was diluting the "real" poker play. I also didn't love that all chips were same value and it is relatively short stacked game (50BB). So I adjusted to $50 buy in and giving everybody $100 worth of chips with chip denominations usually being $0.25, $1, and $5. Blinds at $0.25/$0.50. This has a more "real" feeling with actual chip denominations and much deeper stacked (200BB). I setup a little calculator on my phone to calculate the cash out at the end of the night. The $50 buy in hasn't really slowed down the overplaying of hands as much as I would like. I think that for some people in my group it wouldn't really matter what I raise it to, the amount isn't meaningful enough to them to change the style of play. And I think if I increase the buy-in any more I would lose people. So generally happy with the $50 buy in.
Hopefully not too much of a divergence of topic, but wondering how people use casino chips in these lower stakes home cash games? Most of my casino sets have relatively available quantities of $5, $25, and $100 denominations, but often hard/impossible to find $1's and fracs. For example, with my Dunes set I have a lot of $5, $25, and $100. I found some hot stamp NCV $25 Dunes chips that I use as a $0.25. I have relabeled Boulder Station $1's as my $1's. And then use the actual Dunes $5 as my $5. But in that scenario, 1 of the 3 denominations on the table is a relabel and 1 is a tournament chip/hot stamp. I am finding it hard to find a way to use the $25 and $100 chips. For my Harrah's New Orleans I use the $25 as $0.25, the $100 as $1, and the $500 as $5. That seems to work OK, basically everybody has 100x their buy-in. I am thinking maybe going to something like $50 buy in gets you $500 in chips and playing $2/$5. With 10x buy in, conversion at end of night still relatively simple (very simple with calculator on phone) and still relatively deep stacked at 100BB. Would be able to get some of the higher denomination chips in play. Curious what others are doing to get casino chips on the table.