When one hears “million-dollar home,” you might think of a residence with a four-car garage and an infinity pool. Conversely, “starter home” usually conjures up images of a fixer-upper to call your own that’s small enough for a real estate listing to describe as “cozy.”
But a new Zillow analysis shows that in some cities, that modest first home can cost you at least a million bucks.
The real estate site says in 237 cities in the U.S., your typical starter home — defined as a dwelling in the lowest third of home values in a given region — will run you seven figures.
By comparison, five years ago that would have been true in just 87 cities.
The real estate site says the typical starter home in the U.S. is worth $196,611, but prices for such places have shot up 54% in the past five years — more than the price of larger homes — as a result of a shortage of available houses that started during the pandemic.
Zillow says 50% of all 50 states have at least one city with $1 million-plus starter homes, with California leading the way with 117. New York has 31 cities where starter home prices are that high, with Jersey clocking in at 21. Florida and Massachusetts round out the top five; they have 11 such cities.
That said, Orphe Divounguy, a senior economist at Zillow, offers “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.”