A new report by Zillow outlines that the cost of a starter home in numerous U.S. cities now exceeds $1 million.
According to Zillow, the typical starter home now goes for over $1 million in 237 U.S. cities, which is up from 84 such cities in 2019. Zillow said about half of these cities are located in California. New York has 31 such cities while New Jersey has 21. Florida and Massachusetts have 11 each.
In most of the U.S., the amount needed for a starter home is far less. Zillow says the typical starter home throughout the U.S. is going for about $196,000.
Scripps News
Report: $76K salary needed to buy starter home as down payments surge
The price for a starter home has outpaced typical housing costs, Zillow said. The price for a starter home increased 54.1% over the last five years, while the typical U.S. home is 49.1% more expensive.
A starter home is defined by Zillow as being among those in the lowest third of home values in a given region.
"Home buyers are battling affordability and availability today. So much so that $1 million is the norm for a starter home in hundreds of cities," said Orphe Divounguy, a senior economist at Zillow. "However, it's looking more and more like there will be some good news ahead for first-time buyers. 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."
Earlier this year, Redfin released data showing that it takes $76,000 in annual income for the typical starter home in the U.S. Four years ago, the typical American needed just over $40,000 a year to afford a starter home.
As homes become more expensive, population and job growth are seen as major reasons why middle-class Americans are struggling to afford to buy a home.
