A new report has found that starter homes are growing more expensive for those who want to live in major cities in the United States, with at least $1 million needed in more than 200 cities.
According to the report from Zillow, while the average entry-level home in the country costs around $200,000, in 237 cities, that would be needed for just the down payment on a starter home as supply issues continue to plague the challenging housing market.
The report highlights how drastic the price is, as starter homes are defined as being in the lowest third of home values in any given region.
The issue has only worsened in the last five years, as seven figures were needed for a starter home in only 84 US cities just a half-decade ago.
The report also noted that half of all US states have at least one city where a relatively modest residence is priced at least $1 million. Some states have even more, with California topping out at 117, New York at 31, New Jersey at 21, and Florida and Massachusetts each having 11, Zillow reported.
The pandemic has played a role in the housing shortage, as cities like Boston, Massachusetts; Sacramento, California; and Portland, Oregon, have all seen supply dwindle, Zillow shared.
The online realtor also noted that even with 1.4 million homes being built in 2023, it wasn’t enough to close the gap between available units and those seeking a home.
Zillow senior economist Orphe Divounguy stressed that the situation is growing worse while speaking with CBS News.
“It’s no surprise we are kind of in a housing affordability crisis across the US,” Divounguy told CBS MoneyWatch. “You saw a couple of decades of underbuilding, clashing with a surge in residential mobility during the pandemic that pushed prices and rents higher.”
Still hope could be on the horizon, according to Divounguy, who said as more homes become available, price cuts will rise.
“There is some light at the end of the tunnel. We have more newly built homes coming on the market, and builders are trying to make the math work for homebuyers. As inventory increases, you’re likely to see price growth continue to ease and more sellers offering price cuts,” Divounguy said.