:max_bytes(150000):strip_icc()/WhatToLookforinaStarterHome-aeca1fad4087452f95bfb2b461b610ca.jpg "$1M Starter Homes: US Cities & Income Needed")
$1M Starter Homes: US Cities & Income Needed
- The number of U.S.metro areas where starter homes cost $1 million or more has nearly tripled since 2020, according to a March 2025 study by Zillow.
- Zillow defines starter homes as those in the lowest third of home values in a given area.
- Financial experts frequently enough advise following the 30% rule, which suggests spending no more than 30% of gross income on housing costs.
The million-dollar starter home is no longer a rarity.We analyze the surge in these high-priced properties across U.S. metro areas, revealing a nearly threefold increase since 2020. Discover the lasting impact of pandemic-era price growth and how it affects affordability. Learn the critical 30% rule financial experts recommend for housing costs and the income needed to comfortably afford a $1 million home. Explore the complex relationship between housing costs and income, as many homeowners spend more than 30% on housing.News Directory 3 delivers critical insights on the current state of the market. WhatS the impact on you? Discover what’s next …
Million-Dollar Starter Homes surge Across the U.S.
Updated June 24,2025
The number of U.S.metro areas where starter homes cost $1 million or more has nearly tripled since 2020, according to a March 2025 study by Zillow. The study revealed that 233 metro areas now have entry-level homes in this price range, a significant jump from just 85 in 2020. This increase in million-dollar starter homes reflects the lasting impact of pandemic-era housing price growth.
Nationally, the average starter home costs $192,514. Zillow defines starter homes as those in the lowest third of home values in a given area. Despite the relatively low national average, affordability remains a major concern as housing costs outpace wage growth.
Financial experts frequently enough advise following the 30% rule, which suggests spending no more than 30% of gross income on housing costs. This guideline, established by the federal government, aims to ensure homeowners can cover other essential expenses such as food, transportation, adn healthcare.
Housing costs, particularly with a mortgage, include loan principal, interest, property taxes, and homeowners insurance. When these expenses exceed 30% of income, homeowners may struggle to meet other financial obligations.
For example, purchasing a $1 million home with a 20% down payment and a 6.75% interest rate would result in a monthly payment of $6,314.11. Adhering to the 30% rule, a buyer would need a monthly income of $21,047.03, or an annual income of $252,564.40, to comfortably afford such a home.
Though, the housing cost-to-income ratio was 34.75% in May 2025, according to Investopedia‘s housing affordability data. This indicates that many homeowners are spending more than 30% of their income on housing, leaving less for other necessities or financial goals.
What’s next
First-time homebuyers should thoroughly research housing costs and mortgage rates to secure the best possible deal. Obtaining mortgage quotes from multiple lenders can lead to significant savings on mortgage payments.