Summary
Zillow Group Inc (ZG, Financial) has released a new analysis revealing a dramatic increase in the number of U.S. cities where starter homes are priced at $1 million or more. As of April 24, 2025, the number of such cities has risen to 233, up from 85 five years ago. This trend highlights the impact of pandemic-driven price growth on housing affordability, with California leading the count. Despite this, the typical starter home nationwide remains valued at under $200,000, offering some relief to first-time buyers.
Positive Aspects
- The typical starter home nationwide is still valued at an attainable $192,514, providing opportunities for first-time buyers.
- Increased market activity with more homes hitting the market, giving buyers more negotiating power.
- Zillow's BuyAbilityâ„ tool offers personalized, real-time estimates to help buyers find homes within their budget.
Negative Aspects
- The number of cities with $1 million starter homes has increased significantly, indicating a growing affordability crisis.
- California dominates the list with 113 cities, reflecting regional disparities in housing costs.
- Many young households are delaying homeownership, driving up demand and prices for single-family rentals.
Financial Analyst Perspective
From a financial standpoint, the surge in million-dollar starter homes suggests a significant shift in the real estate market dynamics, driven by pandemic-induced price escalations. This trend could impact the affordability index and influence mortgage lending patterns. Zillow's strategic tools like the BuyAbilityâ„ tool and down payment assistance modules are well-positioned to support potential buyers in navigating these challenging market conditions.
Market Research Analyst Perspective
The increase in cities with million-dollar starter homes underscores a critical shift in housing affordability, particularly in high-demand areas like California and New York. This trend may lead to a reevaluation of housing policies and urban planning strategies to address the growing affordability gap. Zillow's comprehensive data and tools provide valuable insights for stakeholders to understand and adapt to these market changes.
Frequently Asked Questions
Q: How many cities now have starter homes priced at $1 million or more?
A: As of the latest analysis, 233 cities have starter homes priced at $1 million or more.
Q: Which state has the most cities with million-dollar starter homes?
A: California leads with 113 cities having million-dollar starter homes.
Q: What tools does Zillow offer to help buyers in this market?
A: Zillow offers the BuyAbilityâ„ tool for personalized home price estimates and a down payment assistance module to help buyers find homes within their budget.
Read the original press release here.
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