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Starter homes are now priced at $1 million or more in 233 cities across the United States, a significant increase from just five years ago when this figure was only 88. This startling statistic comes from a recent analysis by Zillow, highlighting the severe challenges faced by first-time homebuyers in today’s housing market.
For context, Zillow categorizes “cities” as individual housing markets, which may encompass large suburbs or towns within metropolitan areas. The term “starter homes” refers to properties that fall within the lowest third of home values in these markets, indicating that these are not luxury homes but the most affordable options available.
The concentration of $1 million starter homes is particularly pronounced in states with major urban centers where land availability is limited and housing options are scarce. However, this trend has extended beyond traditionally high-cost cities like Los Angeles and New York. Since 2020, states like Michigan, Missouri, Kansas, and Wyoming have each seen the emergence of cities where average starter home prices exceed $1 million. Recently, Minnesota and Rhode Island joined the ranks as well, bringing the total number of states affected to 25.
Below are the ten states with the highest number of cities reporting $1 million starter homes in 2025:
California: 113 cities
New York: 32 cities
New Jersey: 20 cities
Florida: 11 cities
Massachusetts: 11 cities
Washington: 8 cities
Texas: 7 cities
Connecticut: 4 cities
Hawaii: 4 cities
Maryland: 4 cities
This increasing pressure on first-time buyers can be traced to a persistent housing shortage. This situation has been aggravated by a slowdown in home construction activity during the COVID-19 pandemic, contributing to a 45% rise in home prices since 2020, as reported by Zillow.
In addition, rising mortgage rates, escalating insurance costs, and surging homeowners association fees have exacerbated the challenges of homeownership, pushing it further out of reach for many potential buyers. Consequently, the median age of first-time buyers reached 38 in 2024, marking a record high, while their share of home purchases fell to a historic low of 24%, as noted by the National Association of Realtors.
Source
www.cnbc.com