Half of all states have at least one city where starter homes costs begin at $1 million, according to new data from Zillow (NASDAQ: Z, ZG).
Today, a starter home – defined for this analysis as being among those in the lowest third of home values in a market – is worth at least $1 million in 233 cities. Five years ago, there were only 85 such cities. Still, the latest number is down slightly from 239 at the start of this year.
California continues to lead the nation with the most cities offering $1 million starter homes (113), followed by New York (32), New Jersey (20), Florida (11) and Massachusetts (11). Minnesota and Rhode Island joined the $1 million starter home list over the past year.
On a metro level, the Greater New York City area – which includes parts of New Jersey and Pennsylvania – has 48 cities where a typical starter home costs $1 million or more, the highest level in the nation. The San Francisco metro has the next-highest count at 43, followed by Los Angeles (34), San Jose (16), Miami (8) and Seattle (8).
“First-time buyers are facing a market where prices that once seemed unimaginable have become reality,” said Kara Ng, senior economist at Zillow. “The encouraging news for buyers is that starter homes remain well below $1 million in most of the country. With more homes hitting the market, listings lingering longer, and sellers cutting prices at record rates, buyers are starting to regain some negotiating power.”
