In more than 200 U.S. cities, buyers will find a price tag of $1 million or more on the typical starter home. A housing shortage that worsened over the pandemic has helped drive the cost of all homes to new heights.

The typical “starter home” — defined for this analysis as being among those in the lowest third of home values in a given region — is worth at least $1 million in 237 cities, the most ever. Five years ago, there were only 84 such cities.

Nationwide, the typical starter home is worth $196,611, which is comfortably affordable for a median-income household. However, starter home values have grown 54.1% over the past five years, even more than the 49.1% increase for the typical U.S. home in the same timeframe. That has delayed 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.

It is looking more and more like there will be some good news ahead for home buyers. After years of heightened competition, a slightly more balanced market may be just over the horizon. There are more homes on the market as the effects of rate lock ease and builders continue adding more supply. With more homes for-sale, buyers have more time to weigh their options. Rising housing inventory is also helping the negotiating power swing in buyers’ favor as price cuts are at record highs for this time of year.

Almost half of cities with $1 million starter homes are in California

Exactly half of all states have at least one city with a typical starter home worth $1 million or more. There are 117 such cities in California, well ahead of New York (31) and New Jersey (21), which have the next most. 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, then 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. 

Metros with the most-restrictive building regulations tend to have the largest number of cities with $1 million starter homes. They are also markets with lower homeownership rates.