A recent report from real estate technology company Zillow found that 242 U.S. cities now feature “starter homes” valued at $1 million or more.
At the same time, the median annual salary for young professionals aged 25 to 34 stands at $59,280, according to the Bureau of Labor Statistics (BLS).
This chasm between median wages for young people and entry-level home prices in major markets upends traditional affordability metrics.
“Affordable housing is generally defined as housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities,” explains the Department of Housing and Urban Development (HUD).
While the typical starter home remains valued at $198,649 nationally, Zillow found, entry-level real estate has eclipsed $1 million in high-cost regions.
California still claims the largest number of cities where entry‑level homes top the million‑dollar mark, but the fastest acceleration is happening in New York and New Jersey.
“The pandemic reset the cost of buying a home, spreading million-dollar starter homes from a handful of coastal states to more than two dozen states across the country,” said Zillow senior economist Kara Ng.
The New York City metro area — which spans parts of New Jersey and Pennsylvania — now has 63 cities where a typical starter home reaches or exceeds $1 million, the most of any metro region. It’s followed by the San Francisco metro with 37, then Los Angeles (33), San Jose (13), and both Miami and Seattle at 8 each.
“The number of cities where a typical starter home is worth $1 million or more has nearly tripled since before the pandemic, rising from 80 in February 2020 to a record 242 today,” Zillow wrote.
Affordabiity crisis for first-time homebuyers
“The 30-year FRM [fixed-rate mortgage] averaged 6.52% as of June 11, 2026, up from last week when it averaged 6.48%,” wrote Freddie Mac.
Based on a 30-year FRM of 6.52% and the median annual salary of $59,280 for professionals aged 25 to 34, I ran calculations that reveal some shockingly difficult financial scenarios, indicating a growing crisis for first-time homebuyers.
- The baseline reality: A young adult earning the median salary of $59,280 brings home exactly $4,940 gross per month, meaning a traditional 30% allocation allows for a maximum monthly housing cost of $1,482.
- The 20% down payment scenario: Purchasing a $1 million home with a 20% down payment ($200,000) leaves an $800,000 loan balance; at a 6.52% interest rate, the principal and interest payment is $5,067 per month, requiring an annual income of at least $202,683 to meet the 30% affordability rule.
- The 5% down payment scenario: Utilizing a lower 5% down payment ($50,000) results in a $950,000 loan balance; at a 6.52% interest rate, the principal and interest payment shifts to $6,017 per month, demanding a minimum annual income of $240,686 under the 30% rule.
- The dual-Income co-buying scenario: If two median-earning young professionals combine forces to generate a household income of $118,560, their maximum 30% monthly housing budget scales to $2,964, leaving them short by $2,103 a month for just the base principal and interest on the 20% down payment scenario.
(Source: Jeffrey Quiggle, TheStreet)
Current homeowners face financial challenges
I also ran some calculations to create scenarios that current homeowners might encounter when selling or moving, using the current 30-year FRM of 6.52% and a $1 million home price.
- The golden handcuffs scenario: A homeowner who bought a starter home before the pandemic likely locks in a 3% mortgage rate, resulting in a $3,373 monthly payment on an $800,000 loan balance.
- The trade-up reality: Selling that same home for $1 million and purchasing a comparable $1 million home in a new city at today’s 6.52% rate swells the monthly principal and interest payment to $5,067, adding $1,694 to their monthly overhead for no net gain in property value.
- The equity leverage scenario: If a seller walks away with $400,000 in net equity from their previous property and rolls the entire amount into a 40% down payment on a new $1 million home, their new $600,000 mortgage at 6.52% still results in a $3,800 monthly payment — higher than their original low-interest loan on an $800,000 balance.
- The transaction cost drain: Between standard 5% to 6% agent commissions, transfer taxes, moving expenses, and closing fees, current owners sacrifice roughly $60,000 to $70,000 of their hard-earned equity just to execute the swap between million-dollar properties.
(Source: Jeffrey Quiggle, TheStreet)
Northeast growing rapidly with $1 million starter homes
New York and New Jersey are seeing the quickest expansion on Zillow’s list, together adding 15 new cities over the past year. New York now counts 41 such cities — a huge jump from just 12 before the pandemic — while New Jersey has climbed to 26, up from only one.
This surge lines up with what Zillow highlighted in its 2026 hottest markets analysis: Six of the nation’s ten most competitive housing markets are in the Northeast, a region where new construction has lagged for years and inventory shortages remain severe.
“Million-dollar starter homes are popping up in more Northeast cities because the housing shortage there hasn’t been solved,” said Ng. “Sun Belt markets have responded with new supply and seen price growth moderate as a result.”
“The Northeast hasn’t had that relief. Eliminating barriers to building like restrictive zoning is the most direct path to improvement, which is something Zillow is actively advocating for across the country.”
Related: Redfin reveals blunt prediction on mortgage rates, housing market
