It’s more expensive than ever to get off the treadmill of renting and into owning your own home—at least, in many parts of the country.
A new study from Zillow found that “starter homes,” once considered a modest investment that allows families to wade into the real estate market and begin to lay down roots, now cost $1 million or more in 242 U.S. cities.
According to Zillow, the 242 cities where starter homes cost at least $1 million is a record high, and a three-times higher figure than only six years ago.
A starter home is defined by Zillow as being in the lowest third of home values in a given region
Most of these cities can be found in the historically more populated and desirable states where cost of living has always been high—the Los Angeles basin, Bay Area, Silicon Valley and New York Metropolitan area account for the bulk.
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California leads the way with 105 cities with million-dollar starter homes; New York lands at second with 42, and New Jersey boasts 26—a massive leap in just a few short years.
“New York and New Jersey are the fastest-growing states on the list, adding 15 cities combined in the past year. New York’s total has reached 41 — up from just 12 before the pandemic — while New Jersey’s has grown to 26, up from only one,” Zillow analysts write.
Florida (11), Massachusetts (10), Washington (8), and Texas (7) are the next four on the list.
Kara Ng, a senior economist at Zillow, said the onset of the coronavirus pandemic has had a lasting impact on the U.S. housing market with prices soaring in the usual-suspect states, while more of these traditionally affordable cities are creeping up in price.
“The pandemic reset the cost of buying a home, spreading million-dollar starter homes from a handful of coastal states to more than two dozen states across the country,” Ng said in Zillow’s Front Porch newsletter.
But Ng says while those million-dollar starter homes are becoming the norm in major metro areas, there are still pockets of affordability spread across the U.S.
Not very comforting for those of us currently living in one of these million-dollar cities
Across the entire country, the cost of a starter home comes in just under $200,000, and the Zillow economist says the conditions for buying are better than they have been in years.
“More inventory, slower price growth and a narrowing rent-versus-buy gap mean buyers who are financially prepared are generally in better shape than in recent years,” Ng said.
The typical home buyer (depending on where they buy) can theoretically break even relative to renting in about six years, down from 2023 when the break-even point was about eight years.
Where are the affordable starter homes?
Starter homes are most affordable in the Midwest, parts of the Deep South and the Rust Belt.
Zillow’s 2026 list of best markets for first-time buyers highlights Jacksonville, Florida, as the top U.S. city for first-timers. Birmingham, Alabama; San Antonio, Texas; Atlanta and Houston were also among the top cities.
The Sun Belt region, typically considered the southern and southwestern region of the country, is changing the landscape for both buyers and renters.
Six of the top 10 cities to make Zillow’s list of best markets for first-time buyers are in the Sun Belt region, which is seeing a pseudo renaissance as home sales are experiencing a significant rebound.
The reason? Supply is surging because more homes are being built.
And it’s not just single family homes that are becoming more affordable; rent prices in the Sun Belt are also dropping for the same reason.
Read More: Rental prices dropping in cities where new units are being built
Supply has outpaced demand in these cities, leading to lower prices and landlords going the extra mile to try and entice renters.
The studies, both conducted by Zillow, echo the sentiment made by urbanists and housing advocates ad nauseam: “abundance, abundance, abundance.”
If we believe in one of the core tenets of capitalism, that supply determines the cost of goods and services, the more housing that is built, the more affordable the cost of housing becomes.
If Los Angeles, San Francisco, New York and other major metro areas are serious about addressing the cost of living, there’s plenty of real-world evidence from which to gather inspiration.
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