The number of US cities with $1 million starter homes has nearly tripled since 2019, bleakly shaping the outlook for first-time homebuyers.
A typical “starter home” — a home in the bottom third of home values in a given area — is worth at least $1 million in 237 cities, the highest number of cities ever recorded — up from just 84 in 2019. New Research From real estate marketplace Zillow.
California leads the way with the most cities in the state with home prices over $1 million, 117, up from 53 in 2019. New York is a distant second, with 31, up from 13 in 2019.
New York has 31 cities, including the Hamptons, where the typical first home price is more than $1 million. Little Knee – stock.adobe.com
The New York list includes trendy towns in the Hamptons and Long Island hotspots like Huntington Bay, Manhasset and Old Westbury.
New York City was excluded because “the average for the bottom third of homes in New York City is actually below $1 million,” a Zillow spokesperson noted.
Meanwhile, a typical entry-level home in the U.S. costs around $200,000, which is equivalent to a down payment in a city where homes cost $1 million.
A housing shortage and high mortgage rates have caused first-home prices to rise 54.1 percent over the past five years, outpacing the 49.1 percent increase for the typical U.S. home, the study found.
The average age of first-time home buyers was 35 last year, one year higher than in 2019, according to the survey.
But there’s good news for first-timers, according to Orphée Divongay, senior economist at Zillow.
“More homes are being listed for sale, price reductions are on the rise, and buyers have a few more days to consider their options while homes remain on the market,” Divengy said in a statement.
