A million-dollar home price is no longer synonymous with luxurious living.
In more than 200 U.S. cities, prospective homeowners will have to shell out the amount needed for a typical starter home, according to a new Zillow report. analysis.
The real estate market defines a “starter home” as properties that fall within the bottom third of home values in a given region.
The typical starter home was found to have surpassed this staggering price threshold in 237 US cities, nearly triple the number in 84 five years ago.
Nearly half of the cities are in California, known for its high housing costs, but exactly half of all states have at least one city where a million-dollar starter home is the norm.
Nearly half of the cities are in California, known for its high housing costs (pictured: a street in San Francisco)
According to Zillow, starter homes in these cities cost more than five times the national average of $196,611, which is comfortably affordable for a median-income household.
The housing shortage that worsened during the Covid-19 pandemic has pushed the cost of housing across the United States to new heights.
Starter home values have grown 54.1 percent since 2019, which is even more than the 49.1 percent increase for the typical U.S. home over the same period.
This has priced many potential home buyers out of the market and delayed millions of people from purchasing their first home.
Zillow found that in 2023, the median age of a first-time homebuyer was 35, up one year from 2019.
California is home to 117 cities where the typical starter home costs more than $1 million, including places like Santa Monica, Montecito and Carmel Valley.
This figure has more than doubled since 2019, when it housed 53 people.
California is far ahead of New York, which has 31, and New Jersey, which has 21.
Florida and Massachusetts round out the top five with 11 each. While the Sunshine State was home to four cities with million-dollar starter homes five years ago, Massachusetts had none.
States like Utah, Illinois, Missouri and Kansas, which in 2019 did not have a single city with million-dollar starter homes, now have one.
For example, in Utah, it’s Alta, a ski town near Salt Lake City, and in Kansas it’s Mission Hills, a suburb of Kansas City.
Exactly half of all states have at least one city where a million-dollar starter home is the norm (pictured: Seattle in Washington, which is home to eight cities)
“Homebuyers are struggling with affordability and availability,” said Orphe Divounguy, senior economist at Zillow
Irvine, California, which has a population of more than 300,000, is the largest city with million-dollar starter homes, Zillow found.
Among metropolitan areas, the New York metropolitan area, which includes parts of New Jersey and Pennsylvania, has 48 cities with million-dollar starter homes, the highest number in the country.
The San Francisco metropolitan area has 44, Los Angeles has 35, San Jose has 15, and Miami and Seattle have eight each.
“Today, homebuyers are struggling to find a good price and find an available home. So much so that $1 million is the norm for a first-time home in hundreds of cities,” said Orphe Divounguy, senior economist at Zillow.
‘However, it seems increasingly likely that there will be good news for first-time homebuyers.
‘There are more homes for sale, price cuts are increasing and buyers have a few more days to weigh their options while homes remain on the market.’
This comes as experts warn that home prices will experience a drastic drop in pandemic-era “boom towns” in the South.
Recent reports have already shown that in some parts of Florida and Texas the high costs are beginning to decline.