First-time homebuyers in the US are facing bleaker prospects as the number of cities with million-dollar starter homes has nearly tripled since 2019.
The typical “starter home” — those in the lowest third of home values in a given region — is worth at least $1 million in 237 cities, the highest number of cities ever. That compares to only 84 such cities in 2019, according to a new study from real estate marketplace Zillow.
California heads the list of most cities — 117, up from 53 in 2019 — in any state with a $1 million entry-level home price. New York is a distant second with 31, up from 13 in 2019.
New York’s list includes trendy towns in the Hamptons, plus Long Island hotspots like Huntington Bay, Manhasset and Old Westbury.
New York City is excluded because the “average of the bottom third in New York City is actually under $1 million,” a Zillow spokeswoman indicated.
The typical entry-level home in the US, meanwhile, costs roughly $200,000, the equivalent of a down payment in one of the million-dollar home cities.
A housing shortage and high mortgage rates have driven up the price of starter homes 54.1% in the past five years, more than the 49.1% increase for the typical US home, the study found.
The median age of a first-time home buyer was 35 last year, according to the study, a year older than in 2019.
But there is good news ahead for first-timers, according to Orphe Divounguy, a senior economist at Zillow.
“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,” Divounguy said in a statement.