Starter Homes Now Cost $1 Million in 233 Cities Across the Nation

For many Americans, buying a first home feels like chasing a fading dream. Across the United States, the cost of a typical starter home, defined as the least expensive third of homes in a market, has soared. In 233 cities, these entry-level homes now carry price tags of $1 million or more, according to real estate data from Zillow. Just five years ago, only 85 cities faced such daunting costs. While the national median starter home price sits at a more approachable $192,514, the stark contrast in high-cost regions highlights a growing divide in who can afford to own.

The surge in million-dollar starter homes has reshaped the housing landscape, particularly in coastal and tech-driven cities. California alone accounts for 113 of these cities, with New York and New Jersey trailing behind. This trend, fueled by a mix of limited supply, strong demand, and pandemic-era price spikes, has made homeownership a distant goal for many young and middle-income families. As prices climb, the ripple effects touch everything from family planning to wealth-building, leaving a generation grappling with new economic realities.

The housing market’s transformation raises urgent questions about affordability and access. With the median age of renters climbing to 42 and first-time buyers averaging 38 years old, delays in homeownership are becoming the norm. These shifts signal not just a financial strain but a deeper challenge to the idea that hard work and savings can secure a home. The crisis demands a closer look at its causes and the competing ideas for addressing it.

Several factors have converged to drive starter home prices into the stratosphere. A chronic shortage of housing supply, particularly in high-demand urban areas, sits at the heart of the issue. Restrictive zoning laws and land-use regulations, often enacted by local governments, limit new construction, keeping inventory tight. In cities like San Francisco and Los Angeles, where job growth in tech and finance fuels demand, these constraints have pushed prices to dizzying heights. The pandemic added fuel to the fire, with low interest rates and remote work sparking a buying frenzy that lifted starter home values by over 54% in five years.

Beyond supply issues, economic trends play a role. Wages for young adults have stagnated relative to home prices, which have outpaced inflation for decades. The median U.S. home price now stands at $420,400, while the average salary supports a purchase of just $110,928. High mortgage rates, hovering near historic highs, further strain budgets. Meanwhile, institutional investors have snapped up entry-level homes, reducing options for first-time buyers and turning would-be homeowners into long-term renters.

The geographic concentration of high-cost markets amplifies the problem. The South and West, particularly Sun Belt states like California, Texas, and Florida, dominate the list of million-dollar starter home cities. These regions, marked by job growth and in-migration, face acute shortages of affordable rentals and homes. Even states with more affordable markets struggle, with fewer than 30 affordable homes per 100 low-income renters in states like Nevada and Oregon, according to the National Low Income Housing Coalition.

Skyrocketing home prices don’t just lock out new buyers; they deepen economic and racial divides. Homeownership remains a key driver of wealth in the U.S., and those unable to buy miss out on equity gains that have enriched existing homeowners. Between 1984 and 2021, the median wealth gap between white and Black households grew by nearly $70,000, with housing appreciation accounting for much of that increase. At the end of 2021, 74% of white households owned homes, compared to 43% of Black households, amplifying disparities as home values soared.

Younger generations, regardless of race, also face mounting barriers. With only 15% of homes affordable to median-income young families, down from 50% a decade ago, many are stuck renting or living with parents. This delay in homeownership disrupts wealth-building, family formation, and long-term financial security. The psychological toll is real, as young adults express frustration at being priced out of a milestone long seen as a cornerstone of stability.

Gentrification complicates the picture. In some neighborhoods, rising values have boosted wealth for minority homeowners, but the broader trend leaves most renters and aspiring buyers behind. As wealth concentrates among older, wealthier homeowners, the housing crisis risks entrenching inequality for decades, raising questions about how to balance growth with fairness.

Addressing the housing crisis sparks heated debate over the best path forward. Some policymakers and economists argue for increasing housing supply by loosening zoning and land-use restrictions. They point to local regulations, like single-family zoning and minimum lot sizes, as barriers that choke new construction and drive up costs. Advocates for this approach, including some from conservative think tanks like the Heritage Foundation, emphasize market-driven solutions, arguing that deregulation would unleash private development and improve affordability without heavy government spending.

Others, including many Democratic lawmakers and housing advocates, call for robust public investment in affordable housing. The Affordable Housing Credit Improvement Act of 2025, backed by bipartisan support, seeks to expand tax credits to finance more rental homes for low-income households. Supporters argue that direct subsidies and tenant protections are essential to help the most vulnerable, given the market’s failure to provide enough affordable options. Yet, even these advocates often face pushback from homeowners worried about property values or neighborhood changes if zoning laws are relaxed.

Both sides grapple with trade-offs. Deregulation risks fueling gentrification or displacement in vulnerable communities, while subsidies alone may not address the broader supply shortage. Local governments, caught between preserving community character and meeting housing needs, often resist change, leaving federal and state leaders searching for ways to incentivize reform without overriding local control.

The proliferation of million-dollar starter homes underscores a housing market at a crossroads. With 233 cities pricing entry-level homes out of reach and the median renter now 42 years old, the barriers to homeownership are reshaping economic and social landscapes. Solutions will require balancing supply increases with protections for vulnerable renters and buyers, all while navigating local resistance and competing priorities. The stakes are high: left unaddressed, the crisis threatens to widen inequality and erode opportunities for future generations.

For now, young adults and first-time buyers face tough choices, from renting longer to relocating to more affordable regions. Policymakers, meanwhile, must weigh the costs of inaction against the challenges of reform. Whether through deregulation, investment, or a mix of both, the path to a more accessible housing market will demand creativity, compromise, and a willingness to confront tough realities.