By Sabrina Lynch
- In 2025, the share of first-time home buyers plunged to a record low of 21%
- There are now 233 cities where a so-called starter home carries a price tag of $1M
First-time home buyers are starting from the bottom, and still there, due to staggering costs for starter homes across the country. There are now 233 cities where a so-called starter home carries a price tag of $1 million, a crippling figure for entry level buyers who already have to scrimp and save in a volatile economy to keep up with housing costs.
Why It Matters:
Five years ago, there were only 85 cities where a starter home was worth a seven-figure sum. Cut to today, with rising interest rates and tighter housing supply, that number has jumped by more than 150%, in turn, accelerating prices at the bottom end of the housing market. All these factors shatter the illusion that the affordability crisis is going to end any time soon.
10 years ago, a $1 million house was seen as surpassing the bar of luxury home ownership. Now, it’s a foundational price to get a toe, let alone a foot, on the housing ladder. This financial disadvantage can only widen the racial wealth gap given that only 45% of Black families and 51% of Hispanic families own homes, compared with 72% of white families.
Even buyers eyeing the suburbs are confronting prices five to 10 times higher than the typical national starter home cost of approximately $192,514, from a decade ago. On top of that, many Black families still find themselves stuck being renters because they lack access to credit.
It’s a struggle the next generation has already spotted and are making moves accordignly. For exapmle, 84% of Gen Z are delaying major life milestones such as getting married, having children or changing careers, just to afford buying a home.
What’s Next:
In 2025, the share of first-time home buyers plunged to a record low of 21%, however there is a small mercy. The latest number of cities with seven-figure starter homes dipped slightly from 239 at the start of 2025, down to sellers making a comeback.
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