The number of US cities where first-time homebuyers are faced with at least a $1 million price tag on the average entry-level home has nearly tripled in the past five years, according to new research.
A Thursday report from Zillow indicates that a typical starter home is now worth $1 million or more in 237 cities, up from 84 cities in 2019, underscoring America’s ongoing home affordability crisis.
“Affordability has been strained across the board,” Orphe Divounguy, a senior economist at Zillow, said. “We see the largest number of million-dollar starter homes in expensive coastal markets. We see them in markets with very low homeownership rates and we see them in markets with more building regulations.”
This smells like bullshit. I mean, if they define “Beverly Hills” as a city, I can see where it might be literally true, but I wouldn’t call even the cheapest house in Beverly Hills, Scarsdale, or Paradise Valley a “starter” home. There’s homes in the LA, New York, and Phoenix metros under $3-400k, if you’re not so choosy about the neighborhood.
Beverly Hills is literally a city. It is autonomous from the Los Angeles city government. It has its own government and its own laws.
And do please show me where the L.A. homes under $400k are. There weren’t L.A. homes that cheap outside of Watts when we lived there over a decade ago and I’m not even sure about Watts.
https://www.zillow.com/homedetails/20159-Cohasset-St-UNIT-9-Winnetka-CA-91306/68991194_zpid/ I’m sorry if that doesn’t fit your criteria for a “L.A. home,” but it is a place you can live, in Los Angeles, under $400k.
But that’s my point: some cities do not have any “starter” homes, at all, and defining a “starter home” as just the bottom third of every municipality is misleading bullshit. It implies that you need $1M to buy a home, and you don’t.
I agree that home prices have gotten crazy and unaffordable for many. I just want to have a realistic discussion of what that means so we can work on realistic solutions, and “you need $1M mortgage just to get your foot in the door” doesn’t help.
Oh, okay. Sure. If you want to live in the middle of the SFV and are okay with a 3-hour commute, it’s doable. I don’t think you realize how big L.A. is. It took me well over an hour to get from NoHo, which is in the SFV, to the guy I bought weed from in Canoga Park, which is next to Winnetka. But sure. Go out far enough and the homes get marginally cheaper.
From a canadian perspective, it sounds believable. About 10 year ago, you could get a new build on half an acre for 350k in my hometown. Today the oldest, run down, needs lots of renovations houses in the city on a quarter acre are going for over 400k. Those 350k new builds are easily into 700-900k range.
My biggest mistake in life was not buying a house fresh out of high school, but i was an “idiot” who looked at housing as a place to live, not an investment.
Im pretty old but I often think about how much better off I would be if I got an associate degree and some certs and then bought a house asap.
California?
(checks notes)
More than 100 of the 200 are in California. :) Next closest is New York at 31.
Seems like a mostly California problem.
It’s not just a California problem. It’s a coastal city problem.
It’s not really shocking. The coast is valuable and limited. Living in an expensive coastal town isn’t really “starter home” material.
I mean, the coasts aren’t really that densely populated. If we build nicer cities there would be plenty of potential space.
Instead we build shitty suburbs and sprawl, which will always lead to awful, expensive cities
You wouldn’t say that if you saw what they’re selling for a million dollars. House built in the 1940’s with no maintenance except paying off the inspector not to condemn it? Yup that’s a million dollars. Falling into the ocean because of coastal erosion? It has an extra bathroom, it’s 1.5M.
I joke obviously but I’m not that far off either.
Texas is getting hit hard because it’s gone from very affordable to super expensive quickly.
Homes in my area have tripled in cost over past 5 years.
super expensive
There are very few places in Texas that are super expensive.
I didn’t look at the list, but housing prices are out of control in a lot of places, even if they haven’t hit that $1 million mark yet. A $750k starter home is just as absurd and out of reach for the vast majority of Americans.
We’re telling young people not to have kids and not to buy homes. And it’s everywhere, not just California.
this reminds me of the then they came for me thing. I remember when you could pick up a cheap home if you moved to like iowa. Its not as expensive but its not cheap like before.
Yep. I’m about as smack-in-the-middle as you can get and our home has doubled in value since 2016.
I bought my house a year ago and its estimated value has gone up 50% since then (and the estimate isn’t even aware of all the renovations I’ve been doing). It’s meaningless since I bought it for cash and I’m not going to sell it (mainly because I then wouldn’t be able to find any other house to live in for a reasonable price), but it’s kind of nice to know personally even if it is a symptom of an ongoing social calamity.
Precovid houses I could afford with a weeks pay. Now it’s the whole pay check. Ridiculous. Wanna fix the birth rate fix this. I’m tired of being born at the wrong time for everything. It’s always some bs.
Precovid houses I could afford with a weeks pay. Now it’s the whole pay check.
You mean rent, right? Right?
I hate you. Not really but we’re looking at 4 times that if we want to buy.
No, it was ultra cheap in my region. Cheaper than rent. I begged my partner to by a house since it was HALF our rent for a decent 2014 built house with acres of land. But nooo they want to rent for life. Now that I finally convinced them otherwise I can’t afford it. It causes alot of resentment for me.
You’re not making sense. What is the difference between “a weeks pay” and a “whole pay check”?
If that’s even true, then that only means that most people can afford it. If nobody could afford it, then the prices wouldn’t be this high.
This is the opinion of someone completely unfamiliar with the current situation of housing, how we got here, or quite frankly economics in general.
If the beginning and end of your understanding of this issue is supply/demand, you need… NEED to understand that you are objectively incorrect through lack of info. It is not a difference of opinion, you are flat out spittin some stup’ rn
I mean it is supply and demand, it’s just ignorance of the extreme imbalance that’s been created.
In the rental market there’s a cartel that needs to be dismantled but for buying homes it’s more to do with the vacuum that is wall street investing in those homes as rental properties.
Corporations are buying up these houses faster than individuals and are pricing everyone out of the market. Then they offer them as rentals.
Someone paying the rents? Seems like it’s priced well then. This is how the free market works.
It is how the free market works yes, the problem is that the free market itself is fundamentally broken
The “free market” has resulted in an average of 27 empty homes per homeless person in America.
https://www.self.inc/info/empty-homes/
Guess it isn’t priced well.
The areas where these starter homes are so expensive are areas with big disparities in income. Let’s look at the Bay Area, with all that tech money. There must be some people who can afford those prices. They are probably the ones making good money in the tech sector there. But then all their local services are provided by lower-paid people who can’t live there.
What happens when all those tech workers have kids? No matter where they send their kids for school, the teachers at that school can’t afford to live there and probably have 90 min commutes each way just to find one of those “starter” homes to live in. Ditto for the librarians, and bus drivers, and day care providers. Even the grocery store clerks can’t make enough to afford to live there.
I’m wondering what a “starter home” is in this case.
For me that’d be about 40sqm and 150k €
Are people buying bigger homes than they need?
America is deeply obsessed with single family homes.
Most homes are 90 m² or larger. I’m in a medium sized city in the midwest and I have a 3 bedroom 130 m² home I got for 115€ but it’s already inflated in value in the last 15 months to 138€. I wouldn’t be able to afford the house I purchased 15 months ago, if I was house shopping now. And homes currently cost nearly double what they did in 2019.
I lived in a house in Japan that was a rental. It was about 55sqm + loft with a parking space out front (which became my container garden). It was pretty good for the wife and I with me working from home (so using the 2nd bedroom as an office). I looked at what it would cause to buy a similar house used (far western Tokyo about 1.5 hours to Shinjuku station, neighbors on two sides the legally required 90cm or whatever it was away) – 50 million yen give or take a bit. Someone might look at the price in USD or EUR or something and think it’s not much, but it is for someone getting paid in said yen.
I’m wondering about that too.
In my area, i was above starter home (because of updates) on a 2 bedroom, 1 bath house built in 1946, on a fraction of an acre. But we have an older stock of houses. Where my brothers live, those are not even choices. Those towns really didn’t exist at that time, so most of the houses are much newer, much bigger, on much bigger lots
