Million-Dollar Starter Homes, a Growing Trend

Starter homes, typically the most affordable option for first-time buyers, are now priced at $1 million or more in over 200 U.S. cities. A Zillow report reveals the shocking extent of the housing crisis, with a 54.1% increase in starter home values between 2019 and 2024.

"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. Some much-welcomed news for prospective buyers." - Danielle Hale, Realtor.com’s chief economist.

California Dreamin'?

California tops the list, with half of the cities in this bracket. From 2019 to 2024, the number of Californian cities with million-dollar starter homes more than doubled. This is a contributing factor in the California Community Poll, which found 40% of Californians consider moving out of state due to the high cost of living.

The Data Speaks

• Santa Clara County, CA: $1,583,130
• San Mateo County, CA: $1,573,470
• Marin County, CA: $1,454,450
• San Francisco County, CA: $1,332,660
• Nantucket County, MA: $1,313,450

Logan Mohtashami, HousingWire lead analyst, blames California's failure to reduce the cost of living on insufficient housing construction, resulting in an unhealthy market:

"We still have too many people chasing too few homes. California is going to be a tug of war. Can they keep enough people here? Or do more people just keep moving away?”

A Silver Lining?

While the market favors sellers, there's a ray of hope for buyers: rising home inventory. This shift may empower buyers, giving them negotiating power and time to make informed decisions.

Links:

• Zillow Report on Starter Homes
• Zillow Definition of Affordable
• Zillow on Building Regulations
• California Community Poll
• American Community Survey Data