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A recent report from Zillow has revealed a staggering trend in the United States housing market: the typical price of a starter home has surged to $1 million or more in 233 cities across the nation. This alarming finding highlights the increasing challenges faced by first-time homebuyers, particularly as the real estate landscape has dramatically shifted since 2020.

To arrive at their conclusions, Zillow analyzed estimated home values at the lower end of the housing market, specifically focusing on properties priced between the 5th and 35th percentiles in each city. Surprisingly, the report indicates that in at least one city in half of all US states, starter home prices have hit the $1 million mark. While the national average for starter homes remains significantly lower, at around $192,514, the data illustrates just how steep home prices have climbed, even in states like Rhode Island and Minnesota that traditionally do not feature high real estate costs.

California has emerged as the frontrunner in this trend, dominating Zillow's 2025 list of cities with the most expensive starter homes. The state boasts an impressive 113 cities where the typical starter home price exceeds $1 million. Following closely are New York, with 32 cities, and New Jersey, with 20 cities reporting similar price points. Among the top 15 cities with the highest starter home prices, eight are located in California, with some properties reaching over $3 million. Additionally, four cities in Washington, all situated in the Seattle metropolitan area, also made it onto this exclusive list.

Notably, Jupiter Island in Florida, recognized for its luxurious waterfront estates owned by high-profile celebrities like Bill Gates and Tiger Woods, topped the overall rankings with a staggering average starter home price of $5,850,442 as of March 2025. This figure is a clear indicator of the substantial wealth concentrated in certain areas of the country.

This year, Zillow also reported that two new states have joined the ranks of those with $1 million starter homes: Rhode Island and Minnesota. New Shoreham, a charming town on Block Island, a favored summer getaway, and Minnetonka Beach, a picturesque suburb of Minneapolis, both surpassed the million-dollar threshold.

The increasing costs of homeownership have placed many potential buyers in difficult positions. For first-time homebuyers, the dream of homeownership often feels frustratingly out of reach. According to the National Association of Realtors, the median age of first-time homebuyers reached an all-time high of 38 in 2024, and the proportion of first-time buyers in the market has dropped to a record low of only 24% of all transactions.

Over the past five years, the median sales price of residential homes in the United States has skyrocketed by 42.5%, climbing from $302,487 in March 2020 to an astonishing $431,078 in March 2025. The combination of elevated mortgage rates, rising homeowners' insurance premiums, and increasing homeowners' association (HOA) fees further complicates the homebuying process, making it increasingly challenging for prospective buyers.

These rising costs have led numerous individuals, such as Virginia resident Lawrence Talej, to reconsider their home buying plans. Talej was previously under contract for a $315,000 home in 2019 but withdrew due to maintenance issues. Fast forward four years, and he found that the median price for homes in his Richmond suburb had jumped by over $100,000, forcing him to put his aspirations on hold. "We're royally screwed," he lamented during an interview with Business Insider.

Many prospective homeowners are feeling the strain, even those with six-figure incomes. Tech worker Madelyn Driver and her husband embarked on a home search with a budget of $700,000 and the flexibility of remote work. However, they quickly discovered that finding a property that met their budget and preferences, which included green spaces, a vibrant metropolitan atmosphere, and cultural amenities, seemed nearly impossible. Driver shared her frustrations, stating, "Were finding that even in a vast country like the US, housing options that align with our desires are surprisingly out of budget." She expressed their plan to continue searching for another year before reevaluating their options.

Even those fortunate enough to purchase a home often encounter unforeseen challenges. A first-time homebuyer named Elsa recounted her experience of feeling pressured to enter the market in 2022 before she was truly ready. She and her husband ended up buying a $975,000 home in a Washington, D.C. suburb, which led them to accrue credit card debt to manage the mortgage alongside unexpected repair expenses. "We definitely didn't anticipate having as many repair expenses," she revealed, highlighting the burdens that often accompany homeownership.

The current climate in the housing market raises critical questions about affordability and access, especially for younger generations grappling with rising prices. As they navigate these challenges, many first-time buyers yearn for a way to realize their dreams of homeownership in an increasingly competitive market.