A record 242 cities across 26 states now have starter homes priced at or above $1 million, according to a June 15 report from Zillow. This marks a tripling of such cities since 2020, as housing shortages and pandemic-era demand drove prices up nationwide.
Part 1: Immediate Action & Core Facts
- 242 cities in 26 states now have starter homes priced at $1 million or more, up from 9 states pre-pandemic.
- California leads with 105 cities meeting this threshold, followed by growing numbers in the Northeast due to unresolved housing shortages.
Part 2: Deeper Dive & Context
Pandemic’s Role in Price Surge
Zillow’s analysis attributes the shift to pandemic-driven demand, low mortgage rates, and a national housing shortage. The typical starter home now costs $198,649, up 1.7% year-over-year, while the median home price stands at $418,000, requiring a $117,000 annual income to afford, per Redfin.
Regional Disparities
- Sun Belt markets (e.g., Texas, Florida) have seen moderated price growth due to new supply.
- Northeast cities lack similar relief, with million-dollar starter homes spreading as demand outpaces supply.
Affordability Challenges
Experts recommend keeping mortgage payments under 30% of income after a 15% down payment. However, the median-priced home would require 40% of average household income, highlighting affordability strains.
Zillow’s Definition
Starter homes are defined as those in the lowest third of home values in a given region, typically smaller and lower-priced properties targeted at first-time buyers.