According to Zillow’s real estate analysis, California is one of the most expensive regions in the United States to purchase new homes: a total of 117 cities have starter homes priced at over $1 million.
New York State follows California, with 31 cities having starter home prices reaching a million dollars.
This analysis indicates that the prices of these homes fall within the lowest one-third of housing prices in each region. Across the United States, a total of 237 cities have starter home prices at $1 million or above, a significant increase from the 84 cities in 2019.
The average price of a starter home in the United States is $196,611. Zillow’s data shows that over the past five years, the value of these homes has increased by about 54%.
The company’s data also reveals that the rapid rise in housing prices has led to a slight increase in the median age of first-time homebuyers from 34 years in 2019 to 35 years in 2023.
In the San Francisco metropolitan area, 44 cities have starter home prices reaching a million dollars, ranking second in the nation, only behind the New York City metropolitan area (including New Jersey and Pennsylvania) with 48 cities. The Los Angeles metropolitan area ranks third in the nation, with 35 cities having starter home prices at $1 million; followed by the San Jose metropolitan area with 15 cities.
According to the analysis, Irvine, a Southern California city with a population of over 300,000, is the largest city among those in the United States with starter home prices starting at a million dollars.
Data from the National Association of Realtors shows that first-time homebuyers account for 32% of real estate buyers in the United States, with a median income of $95,900.
Orphe Divounguy, senior economist at Zillow, stated in a release this month, “The biggest challenge for buyers currently is the affordability and availability of homes. In hundreds of cities, a million dollars has become the common price for starter homes.”
However, he also mentioned that first-time homebuyers will receive “good news.” Divounguy said, “There is an increase in housing inventory, and price reductions are becoming more common. Buyers have more time to consider before making a purchase as the average time a home spends on the market has increased.”