Australia isn’t the only country that’s witnessed a staggering rise in property prices over the past few years, with starter homes now costing US$1 million in the US.
According to Zillow, the number of US cities where a starter home is worth US$1 million or more has grown from 84 five years ago to 237 today.
Nearly half of these cities with “million-dollar” starter homes are in California.
However, it’s not all bad news for first-home buyers, with the typical starter home nationwide worth less than US$200,000.
Zillow, senior economist, Orphe Divounguy said the barrier to entry is getting higher across the US.
“Home buyers are battling affordability and availability today,” Mr Divounguy said.
“So much so that $1 million is the norm for a starter home in hundreds of cities,” said Orphe Divounguy, a senior economist at Zillow.
“However, it’s looking more and more like there will be some good news ahead for first-time buyers.
“More homes are for sale, price cuts are on the rise, and buyers have a few more days to weigh their options as homes sit on the market.”
He said a housing shortage that worsened over the pandemic helped drive the cost of all homes to new heights.
Starter home values have grown 54.1 per cent over the past five years, even more than the 49.1 per cent increase for the typical U.S. home in the same time frame – delaying the first home purchase for many.
The median age of a first-time home buyer was 35 last year, a year older than in 2019.
Exactly half of all states have at least one city with a typical starter home worth US$1 million or more.
There are 117 million dollar starter home cities in California, well ahead of New York (31) and New Jersey (21), which have the second- and third-highest numbers.
Florida and Massachusetts round out the top five with 11 each.
Among metropolitan areas, the New York City metro, which includes parts of New Jersey and Pennsylvania, has the most cities with million-dollar starter homes at 48.
The San Francisco metro has the next highest count at 44, followed by Los Angeles (35), San Jose (15), and Miami and Seattle, each with eight. Irvine, with a population of more than 300,000, is the biggest city with $1 million starter homes.
According to Zillow, markets with the most restrictive building regulations tend to have more cities with US$1 million starter homes.
