Between rising home costs and an ongoing housing shortage, even starter homes are becoming unaffordable for most first-time homebuyers. According to housing market platform Zillow, there are now 237 U.S. cities where a starter home costs at least $1 million. Five years ago, just 84 cities had such high prices for entry-level homes. Nearly half of the cities with $1 million starter homes are in California, which leads with 117 cities, followed by New York and New Jersey, which each have 31 and 21 cities with starter homes for over $1 million, respectively. Major metropolitan areas such as New York City, San Francisco, and Los Angeles have the highest counts of million-dollar starter homes.
Nationwide, the typical starter home is worth $196,611, which is comfortably affordable for a median-income household. However, starter home values have grown 54.1% over the past five years, even more than the 49.1% increase for the typical U.S. home in the same timeframe. That has delayed the first home purchase for many. The median age of a first-time home buyer was 35 last year, a year older than in 2019.
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