Welcome to today’s roundup of news in the Real Estate category. In a startling trend, more than 200 cities across the United States are now seeing starter homes with price tags exceeding $1 million. The soaring cost of homes can be attributed to factors such as a housing shortage, increased demand, and rising inflation. A recent report from Zillow highlights the significant rise in starter home values, which have increased by 54.1% between 2019 and 2024, further delaying homeownership for many young Americans. However, there is some hope on the horizon as the housing market sees an increase in inventory, providing prospective buyers with more options and potential negotiating power. To delve deeper into this issue and its impact on the housing market, click the link below.
More than 200 cities have starter homes worth $1 million
In more than 200 U.S. cities, the typical starter home for sale is worth $1 million or higher. The cost of homes has skyrocketed during the pandemic, due to housing shortage, heightened demand, and increasing inflation. A new report from Zillow found that the typical starter home in some markets is way above what the average American can afford.
A starter home is in the lowest third of home values in a given region, according to Zillow. Five years ago, there were only 84 cities where the typical starter home was valued at $1 million. Between 2019 and 2024, starter home values increased 54.1% – contributing to the delay of first home purchases for many young Americans.
Change is on the horizon for prospective first-time homeowners: There is an increasing number of homes on the market, giving buyers more time to weigh their options. Rising home inventory can also help give buyers more negotiating power. “The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further,” said Realtor.com’s chief economist Danielle Hale. “Some much-welcomed news for prospective buyers.”
The typical starter home is worth $196,611. The real estate company called this price, “Comfortably affordable for a median-income household.” A move from California to Texas could save a million dollars. Many Americans are opting in. Of the 237 cities with starter homes worth $1 million, half are located in California. New York has 31 cities with pricey starter homes, followed by New Jersey (21 cities). Between 2019 and 2024, the number of cities in California with million-dollar starter homes more than doubled.
Zillow said that the markets associated with lower homeownership rates tend to have the pricier starter homes. The same goes for markets with restrictive building regulations. Lower inventory is reflected in pricier housing markets.
Last year, the California Community Poll found that 4 in 10 Californians were considering moving out of state, with the majority saying it’s too expensive to live there. Although the poll found a majority of Californians love living in the state, increasing costs of living are the main driver for people moving.
About 64% of counties in the Golden State have median home values above the national median of $389,800. Four of the top five most expensive U.S. counties by median housing price were located in California. County-level data of housing statistics from the American Community Survey shows how much homes are valued at across California.
Nearly half of California residents are considering leaving the state. Outside of California, Massachusetts rounds out the top five counties with the highest median home prices. Logan Mohtashami, lead analyst for HousingWire, a trade publication for mortgage, real estate, and housing professionals previously told USA TODAY that California has been ineffective in lowering the cost of living because not enough homes are being built. That means there is more demand for homes than supply. Mohtashami called the housing market unhealthy, “We still have too many people chasing too few homes,” he said. “California is going to be a tug of war. Can they keep enough people here? Or do more people just keep moving away?”
$1 million starter home? It’s the norm in 237 cities, according to Zillow – ABC7 Los Angeles
Almost half of those cities are in California.
LOS ANGELES (KABC) –A $1 million starter home? Apparently, it’s the norm in hundreds of cities!
According to a recent study from Zillow, the typical “starter home” – which is defined 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.
Plus, almost half of those cities are in California.
New York and New Jersey took the No. 2 and No. 3 spots on the list while Florida and Massachusetts rounded out the top five.
According to Zillow, the typical starter home nationwide is worth less than $200,000, which is more of a down payment in Southern California.
“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.”
To read more about the Zillow analysis, click here.
In more than 200 U.S. cities, $1 million only gets you a starter home – CBS News
A growing number of cities in the U.S. require at least $1 million to buy a starter home, according to a Zillow analysis. This marks a significant rise from five years ago when only 84 cities had starter homes with seven-figure price tags. The housing shortage, exacerbated by the pandemic, has contributed to the affordability crisis. However, there is hope on the horizon as more homes come up for sale and price cuts become more common. California has the most cities with million-dollar starter homes, followed by New York and New Jersey. Building regulations and limited land availability are factors contributing to the high prices in these cities. To learn more about this issue, click the link below.
A $1 million starter home is now the norm in more than 200 US cities | CNN Business
The number of US cities where first-time homebuyers are faced with at least a $1 million price tag on the average entry-level home has nearly tripled in the past five years, according to new research from Zillow. A typical starter home is now worth $1 million or more in 237 cities, up from 84 cities in 2019, highlighting America’s ongoing home affordability crisis. The high prices are most prevalent in expensive coastal markets with low homeownership rates and more building regulations. However, there are some promising signs in the housing market, such as an increase in home inventory, which may provide more negotiating room for buyers. To learn more about this issue, click the link below.
Starter homes cost nearly $1M in more than 200 US cities, report says
First-time homebuyers are facing affordability issues as a new report from Zillow reveals that a typical starter home is now worth $1 million or more in 237 cities, up from 84 cities in 2019. These starter homes are defined as homes in the lowest third of home values in a given region. California, New York, and New Jersey have the highest number of cities with entry-level homes priced at an average of $1 million. The shortage of homes for sale compared to demand has contributed to the rising prices. To learn more about this issue, click the link below.
New homes won’t cure housing affordability problems – The Willits News
A study by Zillow reveals that new homes being built are pricier and larger than existing ones, contributing to affordability issues for first-time homebuyers. Developers argue that they need to build bigger homes to make the expensive land and construction costs financially viable. In California, buyers paid 22% more for new homes compared to existing ones, primarily due to the larger size of new homes. This pattern is not exclusive to California, as nationally, new homes had a 15% higher median sales price and were 16% larger than existing homes. The article emphasizes that simply building more homes is not a quick solution to housing affordability problems, as policy and marketplace challenges contribute to the production of high-end housing. To learn more about this issue, click the link below.