A $1 million starter home is now the norm in more than 200 US cities
A $1 million starter home is now the norm in more than 200 US cities
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.
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.”
where did all this extra money come from to pay for these homes at these rates?
Most homes are simply out of reach for most Americans at this point, particularly if you live in a city. Even renting one is extremely expensive unless you move into a smaller town.
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.
Systemic issue, California is just showing the rot stronger than other places. It's a growing issue for the whole country.
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.
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.
A side effect of sky rocketing housing prices is the annual tax liability also goes up, so people on a low or fixed income may no longer be able to afford the home they've lived in for decades. It's the same problem that happens when neighborhoods are gentrified.
Obviously it sucks if they have to move, but it's hard to feel too sorry for people that have become incredibly wealthy...
Also, municipal expenses don't scale directly with property values... So while local taxes are often based on home values, they are adjusted to the level that meets the municipal budget. If everyone's house doubles in value one year, taxes stay the same, not double...
Some localities limit the increase in taxable value to a fixed percentage, which can combat that. The taxable value of my home is something like 25% of the actual value.
What happens when you sell it?
20 years ago, my mother bought a house for just under 50k. Houses in my hometown, of the same rough location and type, now go for 4x that.
Insane that housing prices have outpaced inflation by such a ludicrous degree. It's almost like the system is broken, the ultra-rich and corporations have found all the good tricks and loopholes and are exploiting them to the detriment of both ordinary citizens and the nation as a whole.
I cannot recommend the book "Escaping the Housing Trap" highly enough. It talks a lot about the funding and financial products around housing and some of the fundamental flaws in the system. It's quite easy to blame institutional owners and they're certainly partly at fault, but it's vastly more complex than that. It's a really great scary read that genuinely had my mouth hanging open at times.
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?
My mortgage payment is $1k at 3.5% interest. That is a 15 year mortgage that I have 5 years left on and the payment includes escrow (taxes and insurance) it was in the $850/$900 range but taxes and insurance have increased.
This is a 4 bedroom/2.5 bath with a 3+ car garage in a small town near a largish college town which is 15 minutes away.
We may be getting an advanced transportation research facility as well.
There are "better" communities in the surrounding area with much higher prices due to very high school rankings.
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.
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.
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.
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
Corporations are buying up these houses faster than individuals and are pricing everyone out of the market. Then they offer them as rentals.
People going massively into debt isn't affordable.
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.
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.