The cost of buying a first home has reached a new milestone in America. According to a new report from Zillow, a record 242 cities now have starter homes worth at least $1 million, nearly triple the 80 cities that met that threshold before the pandemic in February 2020. Just one year ago, the figure stood at 226.

What makes the trend so notable is how far it has spread. Before the pandemic, million-dollar starter homes were largely concentrated in a handful of expensive coastal markets. Yet today, 26 states have at least one city where the typical entry-level home costs at least $1 million, up from just 9 states in 2020. California still leads the nation with 105 such cities, but some of the fastest growth has occurred elsewhere. New York has jumped from 12 cities before the pandemic to 41 today, while New Jersey has surged from just one city to 26.

The phenomenon is no longer limited to traditional high-cost housing markets, as states including Texas, Wyoming, Illinois, South Carolina, and others now have cities where even homes in the lowest third of the market exceed $1 million. The New York City metro area leads the nation with 63 cities containing million-dollar starter homes, followed by San Francisco, Los Angeles, San Jose, Miami, and Seattle.

Zillow attributes the trend to a housing shortage that collided with intense pandemic-era demand and historically low mortgage rates, pushing home values higher across much of the country.

Before the pandemic, million-dollar starter homes were largely concentrated in expensive coastal markets. Yet high home prices have spread into regions that historically offered a lower-cost path to homeownership.

The result is a housing market where affordability challenges are no longer isolated to a handful of well-known hotspots. In many parts of the country, buyers are facing the same pressures that once seemed unique to the coasts: limited inventory, intense competition, and home prices rising faster than many incomes…

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The result is that more Americans are delaying homeownership, remaining renters longer, or moving farther away from job centers in search of affordable housing. Young professionals and growing families often face the greatest challenges as they try to enter the market at a time when the cost of entry has climbed dramatically.

The longer homeownership remains out of reach, the harder it becomes for many families to build equity and establish long-term financial stability.

A larger down payment, higher mortgage payments, and elevated property taxes can put even modest homes out of reach for families with solid incomes. In many markets, households that would have qualified to buy a starter home a decade ago are finding themselves priced out entirely.

When fewer people can afford to purchase homes, demand for rentals often increases, effectively raising rent prices as well. Employers in high-cost areas can also struggle to attract workers when housing costs consume a large share of a paycheck. Communities may find it harder to retain teachers, police officers, firefighters, nurses, and other workers who earn too much to qualify for assistance programs but not enough to comfortably afford local housing prices.

What was once a problem concentrated in a handful of wealthy coastal markets is increasingly affecting the national economy and the ability of ordinary families to put down roots in the communities where they live and work.

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