Number of Cities with Million-Dollar Starter Homes Nearly Triples Since 2019 MABA MassachsuettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

The number of U.S. cities where a starter home is worth one million dollars or more has nearly tripled over the past five years, according to a new analysis by Zillow. In 2019, eighty four cities had million-dollar starter homes; today, that number has surged to two hundred and thirty seven.

California leads the surge

California dominates this trend, with nearly half of these cities located within the state. Out of the two hundred and thirty seven cities, one hundred and seventeen are in California, highlighting the state’s intense housing market. New York and New Jersey follow with thirty one and twenty one cities, respectively. Florida and Massachusetts each have eleven cities with million-dollar starter homes, rounding out the top five states.

Redefining the starter home

A million-dollar price tag no longer signifies luxury living. In many cities, it’s the cost of a typical starter home, defined in this analysis as those in the lowest third of home values in a region. Nationwide, the typical starter home is valued at $196,611, a price considered affordable for a median-income household.

However, a housing shortage exacerbated by the pandemic has driven home prices to new heights. Over the past five years, starter home values have risen by fifty four point one percent, outpacing the forty nine point one percent increase for the average U.S. home. This surge has delayed home purchases for many, pushing the median age of first-time homebuyers to thirty five last year, up from thirty four in 2019.

Impact on homebuyers

“Home buyers are battling affordability and availability today. So much so that one million dollars is the norm for a starter home in hundreds of cities,” said Orphe Divounguy, a Senior Economist at Zillow. “However, it’s looking more and more like there will be some good news ahead for first-time buyers. More homes are for sale, price cuts are on the rise, and buyers have a few more days to weigh their options as homes sit on the market.”

Exactly half of all states have at least one city with a typical starter home worth one million dollars or more. Metropolitan areas with the most cities featuring million-dollar starter homes include New York City (forty eight cities), San Francisco (forty four), Los Angeles (thirty five), San Jose (fifteen), and both Miami and Seattle with eight each. Irvine, California, with a population exceeding three hundred thousand, is the largest city where starter homes cost one million dollars.

Regulatory impact

Markets with the most restrictive building regulations tend to have more cities with million-dollar starter homes. These markets also typically have lower homeownership rates, further complicating the landscape for first-time buyers.

Tools for first-time buyers

For those navigating this challenging market, Zillow offers tools to assist first-time buyers. The Zillow Home Loans’ BuyAbility℠ tool provides a personalized, real-time estimate of home prices and monthly payments that fit within a buyer’s budget. It also offers insights into the likelihood of qualifying for a loan. Additionally, Zillow can connect buyers with expert loan officers and real estate agents to guide them through the process.

Conclusion

The dramatic rise in cities with million-dollar starter homes reflects broader trends in the housing market, marked by increased demand, limited supply, and rising prices. While affordability remains a critical issue, new tools and market conditions may provide some relief for first-time homebuyers looking to enter the market.

The post Number of Cities with Million-Dollar Starter Homes Nearly Triples Since 2019 first appeared on The MortgagePoint.

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