Where Starter Homes Cost $1 Million in the U.S.

The landscape of first-time homebuyers has evolved significantly over the past few decades. In 1990, the typical first-time homebuyer was 30 years old, but today, they are closer to 40. This shift can be attributed to the fact that home prices have surged far beyond income growth, making it challenging for younger individuals to enter the housing market. In fact, in many U.S. cities, even starter homes now come with million-dollar price tags.

A recent report from Zillow revealed that 242 cities across the United States now have starter homes priced at $1 million or more. This represents a record high and is nearly triple the number before the pandemic-induced housing boom. Zillow defines a starter home as a property whose value falls within the lowest third of homes in a local market.

While California continues to dominate the list of states with the highest number of cities featuring million-dollar starter homes, this trend is spreading beyond the traditionally expensive housing markets. Currently, 26 states have cities where purchasing a first home could mean spending seven figures, a significant increase from just nine states before the pandemic.

Where starter homes cost at least $1 million

The concentration of million-dollar starter homes is still prominent in states like California, New York, and New Jersey. California leads the pack with 105 cities where a typical starter home is priced at $1 million or more, followed by New York with 41 and New Jersey with 26. Notably, New York and New Jersey have seen a rapid increase in the number of cities with million-dollar starter homes over the past year.

The New York City metropolitan area, which includes parts of New Jersey and Pennsylvania, boasts the highest concentration of million-dollar starter homes, with 63 cities on the list. This is followed by the San Francisco and Los Angeles metro areas with 37 and 33 cities, respectively.

In recent years, the geography of million-dollar starter homes has expanded, moving beyond traditional coastal markets. This shift is attributed to factors like underbuilding, low inventory, and a price reset during the pandemic era.

Prior to 2020, million-dollar starter homes were primarily found in coastal regions, with Colorado being the only interior state featuring on the list. However, states like Texas, Wyoming, and Illinois now have multiple cities where starter homes exceed the $1 million mark.

The spread of million-dollar starter homes contrasts sharply with national income levels, with the median household income in the U.S. standing at around $83,000 in 2024. This means that a $1 million home costs more than 12 times the annual earnings of a typical household.

Despite the prevalence of million-dollar starter homes in certain areas, they remain the exception rather than the norm nationwide. According to Zillow, the average starter home in the U.S. is valued at approximately $199,000, though prices vary significantly depending on location.

In markets where entry-level homes carry seven-figure price tags, the path to homeownership looks different for today’s buyers compared to previous generations. While the desire to own a home remains strong, first-time buyers are now saving for longer periods, entering the market later in life, and being more flexible about property size, condition, and location.

In many states with million-dollar starter homes, qualifying for a mortgage is no longer just about meeting basic criteria but also about effectively managing the total monthly cost of homeownership, including taxes, insurance, and maintenance.