A starter home will usually have modest square footage, very few amenities (if any), and be on a small plot of land. Ever wonder how much a starter home costs in America now?
How Much Does a Starter Home Cost Today?
A recent report from Zillow found that in 237 U.S. cities, a starter home costs more than $1 million. The home listings website defines a starter home as "being among those in the lowest third of home values in a given region."
Here are some key findings in Zillow’s analysis:
- Half of all states have at least one city with a typical starter home worth $1 million or more.
- The New York City region, which includes parts of New Jersey and Pennsylvania, has the most cities with million-dollar starter homes at 48.
- Next is the San Francisco metropolitan area, which has 44 million-dollar starter homes.
Let’s take a look at the top states with $1 million starter homes, according to Zillow.
| State | Cities with Million-Dollar Starter Homes (June 2024 |
|---|---|
| California | 117 |
| New York | 31 |
| New Jersey | 21 |
| Florida | 11 |
| Massachusetts | 11 |
| Washington | 8 |
| Texas | 7 |
| Hawaii | 5 |
| Connecticut | 4 |
| Colorado | 3 |
Read the full report from Zillow.
What To Know About the Real Estate Market Right Now
According to Zillow, one reason why starter homes have reached the $1 million value mark is because of a nationwide housing shortage, which is something money expert Clark Howard often talks about. As a result, many people are choosing to stay put in their homes.
"Because the person who sells you their house, they're going to go somewhere and be at the mercy of what the market's doing now with higher prices and higher interest rates," Clark has said. "Yes, they get the elevated amount for their home, but now they've got to go to another home with an elevated price and there's no bargain mortgages anymore."
Because of the scarcity of dwellings, starter home values have surged 54.1% over the past five years, Zillow says.
Selling a Home? Read This
If you get an unsolicited offer to buy your home, Clark says you should know that the price likely won't be right.
“Let me tell you, it’s going to be a lowball offer,” Clark says. “Nobody’s getting up in the morning saying, I’m going to be a hero to this individual who owns their home free and clear and has all that equity.”
Buying a Home? Read This
On the other end, if you're looking to buy a home, make sure you get pre-qualified first, and based on how much you're paying in rent, calculate a mortgage payment that includes your current rent plus the monthly overhead costs you'll incur with a home.
“Ignore what you’re pre-approved for. Instead, base what you can really afford on what your current rent is. Remember with that mortgage, you’re going to also have taxes and insurance,” Clark says.
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