Can you still buy a “luxury home” with a million dollars? According to a recent analysis by the real estate company Zillow, in the United States, there are 237 cities – half of them in California – where a million dollars can only get you a “starter home.”
According to Zillow’s definition, “starter homes” are the lowest-priced one-third of homes in an area when sorted from lowest to highest prices. In over 500 cities in California, 117 cities have starter home prices above one million dollars.
Following California, the state of New York has 31 cities where starter home prices reach a million dollars. New Jersey ranks third with 21 cities requiring a million dollars to buy a starter home. Florida and Massachusetts rank fourth and fifth.
Zillow’s analysis states that housing prices in the United States have significantly increased in the past five years. In 2019, there were only 84 cities in the U.S. where starter homes exceeded a million dollars. At that time, California had 53 such cities.
Irvine in Southern California, with a population of over 300,000, is the largest city where starter homes sell for over a million dollars.
Zillow reveals that the average price for a starter home in the U.S. is $196,611. Over the past five years, starter home prices have increased by approximately 54%.
In 2024, the median age of first-time homebuyers in the U.S. is 35, one year older than in 2019.
Analyzing several metropolitan areas in the U.S., Zillow found that the New York City metropolitan area (including some cities in New Jersey and Pennsylvania) has the most cities where starter homes exceed a million dollars at 48. The San Francisco metropolitan area has 44 cities with starter homes over a million dollars, ranking second. Los Angeles metro area has 35 cities where starter homes hit a million dollars, ranking third, followed by the San Jose metro area with 15 cities.
Zillow’s senior economist, Orphe Divounguy, noted that buying a starter home for a million dollars has become the norm in many cities and that homebuyers now face challenges of affordability and housing supply.
The median price of single-family homes in California has exceeded $900,000 since May of this year. In San Diego County, the median price of single-family homes exceeded a million dollars in September last year.