In recent years, the cost of starter homes in the United States has skyrocketed, with more than 200 cities now having typical entry-level homes worth $1 million or more. This trend is particularly pronounced in California, where half of all such cities are located.
According to a report by Zillow, the number of US cities with starter homes valued at seven figures has nearly tripled since 2019. Five years ago, there were only 84 cities where the typical entry-level home was worth $1 million or more. Today, that number stands at 237.
The housing market has been impacted by a combination of factors including a shortage of homes for sale and high mortgage rates. The pandemic has also played a role, with many Americans working remotely and seeking to leave densely populated areas in favor of suburban or rural living.
Despite these challenges, there are signs that relief may be on the way for first-time homebuyers. More homes are coming onto the market, and price cuts are becoming more common as sellers try to make their properties more attractive to buyers.
The typical entry-level home in the US costs roughly $200,000. However, in cities where starter homes cost $1 million or more, this down payment is just a fraction of what is needed to purchase a property. For example, California contains 117 such cities, while New York has 31 and New Jersey has 21.
The shortage of buildable land in coastal markets like California and New York is one factor contributing to the high cost of starter homes in these areas. Building regulations can also be a barrier to new construction, making it more difficult for builders to meet demand.
Despite these challenges, there are still opportunities for first-time homebuyers. By staying informed about market trends and being persistent in their search, they may be able to find a property that fits their budget and meets their needs.
