Want a Starter Home? Prepare To Pay $1 Million in 25 States

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Five years ago, only 85 cities and towns were so outrageously expensive that even a starter home cost seven figures, according to Zillow. The company defines “starter home” as those in the lowest third of home prices in that city.

Today, 233 cities in 25 states have starter homes over $1 million. You can thank the COVID-19 pandemic property surge for that.

“Five to 15 years ago, you could buy a starter home in towns among the Palm Beaches such as Juno Beach, Singer Island, Palm Beach Shores and Jupiter Inlet Colony,” said Jeff Lichtenstein, CEO and broker at Echo Fine Properties. “Those days are over.”

Next, find out how much the salary needed to afford a home has changed in every state.

25 States With $1M Starter Homes

You won’t be shocked to hear that nearly half of those 233 cities are in California.

Here are the states with $1 million starter homes as of March 2025, according to Zillow:

The Least Affordable Metro Areas

The New York City metro area — which sprawls across several states — accounts for 48 of the 233 cities with $1 million starter homes. Buyer beware.

Next come other notorious offenders, such as the San Francisco metro area with 43 unaffordable towns and cities. Runners-up include Los Angeles, San Jose, Miami and Seattle.

Elena Novak, a real estate analyst at PropertyChecker, said starter homes in these cities aren’t exactly impressive specimens. “These are older, small properties in high-demand areas where zoning restrictions, limited inventory and income growth have pushed prices beyond what most first-time buyers can handle.”

Moving for More Value

Younger homebuyers increasingly feel forced to move if they want a chance at homeownership. A recent study from BMO found that 56% of Gen Z and 63% of millennials are willing to move to a new state to buy a home.

Affordable starter homes do exist — just not in Silicon Valley or New York City.

“In cities like Buffalo, Detroit, Pittsburgh, Baltimore and Cleveland, you can still find vacant homes under $100,000 that are structurally sound but need work,” Novak explained.

Skipping Starter Homes Entirely

As homes have skyrocketed in price, young adults have had to wait longer to afford to buy.

The National Association of Realtors reported that the average first-time homebuyer was nearly middle-aged at 38 years old in 2024 — compare that to 1991, when first-time homebuyers averaged 28.

You can see it on the other side of the equation as well, with the average renter getting older. Zillow points out that the average renter is now 42 years old. 

As adults wait longer before buying, many opt to skip the starter home altogether. Fully 66% of Gen Z renters and 61% of millennial renters say “buying a starter home and upgrading to a bigger one a few years later makes no sense anymore,” according to the BMO study.

Instead, they’re opting to wait longer, save more and buy a longer-term home.

It’s a hard time to be a first-time homebuyer, but relief may be on the way. Zillow now predicts home prices will drop 1.7% over the next 12 months, after downgrading their prediction several times in early 2025.

Sources

• Zillow, “In 233 U.S. Cities, Even a Starter Home Costs $1 Million.”
• Jeff Lichtenstein, Echo Fine Properties
• Elena Novak, PropertyChecker
• BMO, “Despite Majority Viewing It As a Life Goal, Some Americans Less Confident They’ll Own a Home: BMO Real Financial Progress Index.”
• National Association of Realtors, “Highlights From the Profile of Home Buyers and Sellers.”

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