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A typical starter home costs at least $1 million in 237 cities in the U.S., a huge spike since the pandemic, according to a new report Zillow released on Thursday.
That’s nearly three times the number from before the pandemic, when the typical starter home cost at least $1 million in 84 cities, the report found.
California accounted for nearly half of all cities on the million-dollar list, with 117 cities, followed by New York with 31 and New Jersey with 21.
“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.”
Starter homes are defined as those in the lowest third of home values for a given region.
The typical starter home costs $196,611 in the U.S., Zillow said. That’s up 54.1 percent over the past five years, a growth rate that exceeded the price increase for the typical home over that same span of time.
The New York metropolitan area — which includes parts of New Jersey and Pennsylvania — has more million-dollar cities than any other area, Zillow said. San Francisco was second on the list, followed by Los Angeles, San Jose, Miami and Seattle.
Those tend to be markets with more restrictive zoning codes that make it more difficult to build new housing, Zillow noted.
“Markets with the most restrictive building regulations tend to have more cities with $1 million starter homes,” Zillow said. “They are also markets with lower homeownership rates.”
