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$1 million ‘starter houses’ are actually the norm in 8 Washington cities


(NewsNation) — A million dollars used to feel like a lot of money, but nowadays, it’s barely enough for a “starter home” in more than 200 U.S. cities, according to new research.

An analysis by Zillow found that the typical “starter home” now costs $1 million or more in a record 237 cities, up from 84 cities in 2019. It’s a surge that underscores the affordability crisis millions of Americans are facing in today’s housing market.


“The number of people who want a home has been growing faster than the number of homes available to them,” said Orphe Divounguy, senior economist at Zillow. “When supply lags demand for housing, prices rise across the board.”

Zillow defined “starter homes” as those in the lowest third of home values in a given region.

Half of all states have at least one city where the typical starter home costs $1 million but the study showed California is in a league of its own, with 117 such cities. New York (31) and New Jersey (21) ranked second and third on the list. Florida and Massachusetts rounded out the top five with 11 cities each.

The report notes that markets with the most restrictive building regulations tend to have more cities with $1 million starter homes. Those same markets also have lower homeownership rates.

Dozens of cities around metro New York City, San Francisco and Los Angeles made the list, as well as multiple cities near Miami and Seattle.

“To make housing more affordable long term, it’s critical that we push forward policies that encourage and allow more construction,” Divounguy said.

According to the study, starter home values have gone up 54% over the past five years, outpacing the increase for the typical U.S. home during the same period.

Part of that rise is due to an ongoing inventory shortage, which has pushed prices to record highs despite elevated mortgage rates.

Last month, a separate Zillow report found that the U.S. is short 4.5 million homes. The inventory challenges, and the price hikes that follow, have more people delaying homeownership. Last year, the median age of a first-time home buyer was 35, a year older than in 2019.

Today’s trifecta of high prices, low inventory and elevated mortgage rates has Americans feeling historically gloomy about the housing market, with 76% now saying it’s a bad time to buy.

However, recent data offers a glimmer of hope for prospective buyers. Home sales sank to a six-month low in June and inventory is starting to rise.

The National Association of Realtors chief economist Lawrence Yun believes the market is starting to change.

“We’re seeing a slow shift from a seller’s market to a buyer’s market,” Yun said.

Divounguy also expects first-time home buyers to see better opportunities moving forward.

“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,” he said.

Nationwide, Zillow data shows the typical starter home is worth roughly $196,000, which is affordable for a median-income household.

Ten states with the most cities where a $1 million starter home is the norm, according to Zillow:

  1. California: 117 cities
  2. New York: 31 cities
  3. New Jersey: 21 cities
  4. Florida: 11 cities
  5. Massachusetts: 11 cities
  6. Washington: 8 cities
  7. Texas: 7 cities
  8. Hawaii: 5 cities
  9. Connecticut: 4 cities
  10. Colorado: 3 cities



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