The $1 Million ‘Starter Home’ Is Now Reality In 233 Cities. Has The American Dream Collapsed? – Financial Freedom Countdown
In 2025, the American dream of homeownership faces a stark reality.
In 233 U.S. cities, even a modest starter home now costs $1 million or more. This dramatic shift, detailed in Zillow’s latest housing market analysis, underscores the growing affordability crisis confronting first-time buyers nationwide.
Once a symbol of luxury, the $1 million price tag has become commonplace for entry-level homes in many urban areas.
Zillow defines a “starter home” as a property in the lowest third of home values within a given market.
While the national median value for such homes is approximately $192,514, in 233 cities, this figure has soared to seven digits.
A Five-Year Surge in Starter Home Prices
The number of cities with million-dollar starter homes has nearly tripled since 2020, escalating from 85 to 233.
This surge reflects a 54.1% increase in starter home values over five years, outpacing the 49.1% rise in overall U.S. home prices during the same period.
California Is The Epicenter of High-Priced Starter Homes
California leads the nation with 113 cities where starter homes cost at least $1 million.
Metropolitan areas such as San Francisco (43 cities), Los Angeles (34), and San Jose (16) are particularly affected.
This trend is attributed to stringent building regulations and limited housing supply.
Million-Dollar Entry Homes Sweep the NYC Metro
The New York City metro area tops the nation with 48 cities; spanning New York, New Jersey, and even parts of Pennsylvania where a typical starter home now comes with a $1 million price tag.
The region’s sky-high real estate prices have pushed even entry-level buyers into luxury territory.
Expansion Beyond Traditional High-Cost Areas
The phenomenon isn’t confined to coastal states.
While California still dominates with 113 cities boasting $1 million starter homes, the trend is spreading fast; half of all U.S. states now have at least one.
Even newcomers like Minnesota and Rhode Island joined the million-dollar club in just the past year.
States like Texas, which had none in 2020, now have seven such cities.
Inflation’s Role in Escalating Home Prices
The inflation during the last 5 years exacerbated housing shortages, driving up prices nationwide.
Remote work trends increased demand in suburban and rural areas, while supply chain disruptions hindered new construction, further inflating home values.
Impact on First-Time Homebuyers
Rising costs have delayed homeownership for many.
Many younger households are putting off buying homes, with the median age of renters now climbing to 42; an all-time high.
High prices, coupled with elevated mortgage rates and limited inventory, have made entering the housing market increasingly challenging.
The Broader Economic Implications
The surge in starter home prices contributes to wealth disparities, as homeownership becomes less attainable for younger and lower-income individuals.
This shift may have long-term effects on economic mobility and community stability.
Strategies for Prospective Buyers
Potential homeowners are exploring alternatives such as relocating to more affordable areas, considering smaller or older homes, or delaying purchases in hopes of market corrections.
Some are also turning to co-ownership models or seeking financial assistance programs.
Looking Ahead to Address the Affordability Crisis
Experts suggest that increasing housing supply through relaxed zoning laws and incentivizing affordable housing development are crucial steps.
Without intervention, the trend of million-dollar starter homes may continue to spread, further limiting access to homeownership.
The American Dream Is Slipping Away
The rise of million-dollar starter homes in 233 U.S. cities marks a significant shift in the housing landscape based on the Zillow report.
As affordability challenges intensify, addressing supply constraints and implementing supportive policies will be essential to ensure that the dream of homeownership remains within reach for future generations
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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