Charles Esther
Starter Homes Now Command Sky-High Prices
Owning a “starter home” — once a symbol of achievable middle-class success — is becoming a distant dream for many Americans. A new report from Zillow reveals that the typical price for a starter home has surpassed $1 million in 233 US cities as of March 2025.
This marks a dramatic surge from just five years ago, when only 85 cities had starter homes at the $1 million threshold.
Zillow defines starter homes as properties valued between the 5th and 35th percentiles of a local market — essentially, homes toward the lower end of the price spectrum.
Affordability Crisis Spreads Beyond Traditional Hotspots
While the national average for a starter home is still relatively affordable at $192,514, Zillow’s findings highlight how housing affordability is deteriorating even in states that were once considered moderately priced.
Surprisingly, states like Rhode Island and Minnesota — not typically known for luxury real estate — joined the list in 2025. In New Shoreham, Rhode Island, and Minnetonka Beach, Minnesota, starter home prices have now crossed the $1 million mark.
California, New York, and New Jersey Lead the Pack
California continues to dominate the rankings, with 113 cities boasting typical starter homes above $1 million.
Trailing behind are New York (32 cities) and New Jersey (20 cities). Notably, eight of the top 15 most expensive cities for starter homes are located in California, where prices in some areas soar beyond $3 million.
At the very top sits Jupiter Island, Florida — a celebrity-favored destination — where the typical starter home commands a staggering $5.85 million.
First-Time Homebuyers Are Feeling the Squeeze
For first-time buyers, these skyrocketing prices represent an enormous hurdle.
The National Association of Realtors reported that the median age of first-time buyers rose to an all-time high of 38 in 2024, with these buyers accounting for just 24% of all home purchases — the lowest share ever recorded.
Over the past five years, the median US home price has increased by 42.5%, from $302,487 in March 2020 to $431,078 in March 2025, according to Redfin.
Adding to the challenge, mortgage rates remain high, and escalating homeowners’ insurance premiums and homeowners’ association (HOA) fees have further stretched buyers’ budgets.
Dreams Deferred: Real Stories From Buyers
Many prospective buyers have been forced to put their dreams on hold. Lawrence Talej, a Virginia resident, nearly purchased a $315,000 home in 2019, only to walk away after discovering maintenance issues.
Four years later, the same area’s median price had risen by over $100,000, sidelining his plans indefinitely.
Similarly, tech professional Madelyn Driver and her husband — armed with a $700,000 budget and the ability to work remotely — struggled to find a suitable home from Colorado to Pennsylvania.
Despite their flexibility, housing options that combined green space, metropolitan energy, and cultural vibrancy remained frustratingly out of reach.
“We’re finding that even in a vast country like the US, housing options that align with our desires are surprisingly out of budget,” Driver said.
The Hidden Costs of Homeownership
Even those who manage to buy homes aren’t necessarily in the clear.
First-time buyer Elsa and her husband purchased a $975,000 home in a Washington, DC suburb in 2022 — only to be overwhelmed by unexpected costs. Saddled with credit card debt to cover repairs like water leaks, Elsa admitted, “We definitely didn’t anticipate having as many repair expenses.”
Their experience is a cautionary tale: high upfront costs are only part of the financial burden of modern homeownership.
The Outlook: A Tough Road Ahead
With starter homes hitting luxury price tags in hundreds of US cities, many aspiring homeowners are being priced out, even with healthy six-figure incomes.
Unless housing supply dramatically increases or mortgage rates ease, the dream of affordable homeownership — particularly for first-timers — may continue slipping farther from reach.
