In more than 200 U.S. cities, the typical starter home for sale is worth $1 million or higher. The cost of homes has skyrocketed during the pandemic, due to housing shortage, heightened demand and increasing inflation. A new report from Zillow found that the typical starter home in some markets is way above what the average American afford.
A starter home is in the lowest third of home values in a given region, according to Zillow.
Five years ago, there were only 84 cities where the typical starter home was valued at $1 million. Between 2019 and 2024, starter home values increased 54.1% – contributing to the delay of first home purchases for many young Americans.
Change is on the horizon for prospective first time homeowners: There is an increasing number of homes on the market, giving buyers more time to weigh their options. Rising home inventory can also help give buyers more negotiating power.
“The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further,” said Realtor.com’s chief economist Danielle Hale. “Some much-welcomed news for prospective buyers.”
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The typical starter home is worth $196,611. The real estate company called this price, “Comfortably affordable for a median-income household.”
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