A $1 million starter home? It's the norm in 237 cities

Rhea-AI Summary

A Zillow analysis reveals that the number of U.S. cities with $1 million starter homes has nearly tripled since 2019, rising from 84 to 237. California leads with 117 such cities, followed by New York (31) and New Jersey (21). Nationwide, the typical starter home is worth $196,611, but values have grown 54.1% over the past five years, outpacing the 49.1% increase for the typical U.S. home.

This trend has delayed first-time home purchases, with the median age of first-time buyers increasing to 35. The New York City metro area has the most cities (48) with million-dollar starter homes, followed by San Francisco (44) and Los Angeles (35). Markets with restrictive building regulations tend to have more cities with high-priced starter homes and lower homeownership rates.

Positive

• Zillow's BuyAbility℠ tool provides personalized estimates for home prices and monthly payments within buyers' budgets
• Zillow offers rental listings for those not ready for homeownership
• More homes are for sale, and price cuts are on the rise

Negative

• The number of cities with $1 million starter homes has increased from 84 to 237 in five years
• Starter home values have grown 54.1% over the past five years, outpacing overall home value growth
• The median age of first-time home buyers has increased to 35, up from 34 in 2019
• Housing shortage has driven the cost of all homes to new heights

The number of cities with 'million-dollar' starter homes has nearly tripled since 2019

• The number of cities where a starter home is worth $1 million or more has grown from 84 five years ago to 237 today.
• Nearly half of these cities with "million-dollar" starter homes are in California.
• The typical starter home nationwide is worth less than $200,000.

SEATTLE, July 25, 2024 /PRNewswire/ -- A million-dollar price tag no longer means lavish and luxurious living. In more than 200 U.S. cities, buyers will find a price tag of $1 million or more on the typical starter home, a new Zillow® analysis finds.

The typical "starter home" — defined for this analysis as being among those in the lowest third of home values in a given region — is worth at least $1 million in 237 cities, the highest number of cities ever. Five years ago, there were only 84 such cities.

Nationwide, the typical starter home is worth $196,611, which is comfortably affordable for a median-income household. But a housing shortage that worsened over the pandemic helped drive the cost of all homes to new heights. 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 time frame. 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.

"Home buyers are battling affordability and availability today. So much so that $1 million 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 $1 million or more. There are 117 such cities in California, well ahead of New York (31) and New Jersey (21), which have the second- and third-highest numbers. Florida and Massachusetts round out the top five with 11 each.

Among metropolitan areas, the New York City metro, which includes parts of New Jersey and Pennsylvania, has the most cities with million-dollar starter homes at 48. The San Francisco metro has the next highest count at 44, followed by Los Angeles (35), San Jose (15), and Miami and Seattle, each with eight. Irvine, with a population of more than 300,000, is the biggest city with $1 million starter homes.

Markets with the most-restrictive building regulations tend to have more cities with $1 million starter homes. They are also markets with lower homeownership rates.

First-time buyers shopping for a $1 million home, or perhaps something closer to average, can find tools to help on Zillow. Zillow Home Loans' new BuyAbility℠ tool will give buyers a personalized, real-time estimate of the home price and monthly payment that fit within their budget, and then provide insight into the likelihood of qualifying for a loan. Zillow can also help buyers find and connect with an expert loan officer from Zillow Home Loans as well as a real estate agent to help guide them through the process.

Zillow also has rental listings for single-family homes, apartments and even individual rooms for those who are not yet ready to jump into homeownership.

State	Cities with Million-Dollar Starter Homes (June 2024)	Cities with Million-Dollar Starter Homes (June 2023)	Cities with Million-Dollar Starter Homes (June 2019)
California	117	98	53
New York	31	26	13
New Jersey	21	15	2
Florida	11	10	4
Massachusetts	11	9	0
Washington	8	8	5
Texas	7	6	1
Hawaii	5	4	1
Connecticut	4	2	0
Colorado	3	3	1
Wyoming	3	1	0
Maryland	2	2	1
South Carolina	2	2	1
Arizona	1	1	1
Georgia	1	1	1
Kansas	1	1	0
Michigan	1	1	0
Minnesota	1	1	0
Missouri	1	1	0
Nevada	1	1	0
New Hampshire	1	1	0
Virginia	1	1	0
Illinois	1	0	0
Rhode Island	1	0	0
Utah	1	0	0

About Zillow Group
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing and renting experiences.

Zillow Group's affiliates, subsidiaries and brands include Zillow^®, Zillow Premier Agent^®, Zillow Home Loans℠, Trulia^®, Out East^®, StreetEasy^®, HotPads^®, ShowingTime+℠, Spruce^® and Follow Up Boss^®.

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2024 MFTB Holdco, Inc., a Zillow affiliate.

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SOURCE Zillow

FAQ

How many U.S. cities now have starter homes worth $1 million or more according to Zillow's analysis?

According to Zillow's analysis, 237 U.S. cities now have starter homes worth $1 million or more, up from 84 cities five years ago.

What is the nationwide average value of a starter home in 2024?

The typical starter home nationwide is worth $196,611 in 2024, according to Zillow's analysis.

Which state has the most cities with million-dollar starter homes?

California has the most cities with million-dollar starter homes, with 117 such cities according to Zillow's analysis.

How much have starter home values increased over the past five years?

Starter home values have increased by 54.1% over the past five years, according to Zillow's analysis.

What is the median age of first-time home buyers in 2024?

The median age of first-time home buyers is 35 in 2024, which is one year older than in 2019.