Buying a starter home today is increasingly out of reach for many Americans as Zillow’s latest analysis reveals an alarming increase—233 U.S. cities now have million-dollar starter homes, nearly three times the number from just five years ago.
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This unsettling trend underscores the urgent challenges facing first-time homebuyers.
Half of the U.S. states now boast at least one city where a starter home costs at least $1 million.
The number of these cities jumped from 85 five years ago to 233 today.
Entries like Minnesota and Rhode Island are newcomers to this list, expanding the problem regionally and beyond high-cost metro areas.
California predictably tops the list, staining the American Dream even further for average citizens hoping to buy their first home.
New York and New Jersey aren’t far behind, reinforcing the trend in states dominated by left-wing policies and bureaucratic red tape.
The New York City metro area leads with 48 cities where starter homes cost $1 million or more, followed closely by other urban hubs.
Starter home prices nationwide still average around $192,514, well below the million-dollar mark seen in select markets.
The encouraging respite from skyrocketing prices partially owes to more sellers entering the market.
This created softening home values and provided some relief for keen buyers, CNBC reports.
Younger generations delaying homeownership casts a shadow on the American ideal.
The record high median age of first-time homebuyers reached 38 in 2024.
Rising mortgage rates that ticked up to an average of 6.83% on a 30-year fixed mortgage haven’t eased the burden either.
The pandemic triggered a housing boom, artificially inflating demand and prices.
Housing shortages, exacerbated by slowed construction during the Covid-19 pandemic, increased prices by approximately 45% since 2020.
Housing markets, facing similar pitfalls, have seen their share of home purchases fall to a disheartening all-time low of 24%.
The good news is that buyers might regain some leverage.
Zillow senior economist Kara Ng declared, “The encouraging news for buyers is that starter homes remain well below $1 million in most of the country.”
'Starter homes' cost at least $1 million in over 200 U.S. cities, Zillow data finds https://t.co/4LGpCbVuVy
— CNBC Make It (@CNBCMakeIt) April 30, 2025
The growth in inventory gives hope that affordability is making a comeback in some regions.
Rising mortgage rates alongside increasing insurance premiums and homeowners association fees paint a worrying picture for first-time buyers.
Whether real change occurs will depend on policymakers taking the necessary actions to preserve affordability in this volatile climate.
