Starter homes now cost $1 million or more in a record 242 cities, up from just 80 in 2020, according to a Zillow analysis.
Zillow defined a starter home as a one in the lowest third of home values in a given region. The average starter home is worth $198,649.
“The pandemic reset the cost of buying a home, spreading million-dollar starter homes from a handful of coastal states to more than two dozen states across the country,” said Kara Ng, senior economist at Zillow. “But while it may feel like a market of beer tastes at champagne budgets, those million-dollar starter homes are still the exception. More inventory, slower price growth and a narrowing rent-versus-buy gap mean buyers who are financially prepared are generally in better shape than in recent years.”
Homebuyers now break even relative to renting after about six years, which is lower than the over eight years in 2023.
Twenty-six states have at least one city with million-dollar starter homes, compared to nine before the pandemic, when coastal states dominated the list. California currently leads the nation overall with 105 cities.
New York and New Jersey added 15 cities combined in the past year making them the fastest-growing states on the list.
The New York City metro area has 63 areas where a starter home can cost $1 million or more. The New York City Metro area includes parts of New Jersey and Pennsylvania. Miami and Seattle both have eight cities.
Florida has 11 cities with median home prices above $1 million, followed by Massachusetts with 10, Washington with eight and Texas with seven. Illinois, Arizona and Georgia each have one.
“Million-dollar starter homes are popping up in more Northeast cities because the housing shortage there hasn’t been solved,” said Ng. “Sun Belt markets have responded with new supply and seen price growth moderate as a result. The Northeast hasn’t had that relief. Eliminating barriers to building like restrictive zoning is the most direct path to improvement, which is something Zillow is actively advocating for across the country.”