There are a record 550 U.S. cities where the typical home value is $1 million or more, according to Zillow. That’s up from 491 last year—a 12% jump—and median year-over-year price growth in these cities is 4.6%, meaning expensive homes are getting more costly.

“For homebuyers, the prevalence of million-dollar cities significantly—greatly—strains what is already the worst housing affordability since at least the 1980s,” Christopher M. Naghibi, executive vice president and chief operating officer at First Foundation Bank, tells Fortune. “Prospective buyers in these markets face higher barriers to entry, needing ridiculously large down payments and higher incomes to afford homes.”

Where are the most million-dollar homes?

By far, California is the state with the most “million-dollar cities”: There are 210 such cities there, including Los Angeles, San Francisco, San Jose, Santa Barbara, and San Diego. That’s not particularly surprising, considering the high-wage jobs and high cost of living that come with being a California resident, experts agree. 

Indeed, California is also among the states with the highest density of Fortune 500 companies, including Apple, Google, and Meta. 

“Tech companies in Silicon Valley have also contributed to the rising housing prices in California,” Maureen McDermut, a realtor with Sotheby’s International Montecito, tells Fortune. “It isn’t a surprise that housing competition in the state is fierce, which, coupled with low housing inventory, has pushed prices up significantly.”

Due to the “enormous economic growth” in major California cities, people with higher-paying jobs can afford more expensive homes, Tate Kelly, a broker with Coldwell Banker Warburg, tells Fortune. It’s just part of the housing Catch-22, in which only the wealthy can truly afford homes in the most expensive cities.  

“There is enormous economic growth where [these] companies are located,” Kelly says. “This means an influx of employees with high-paying jobs willing and able to spend more for their homes.”

The surge in California home prices has been all-around challenging for buyers, sellers, and agents alike due to the mansion tax in Los Angeles, which applies to property sales of at least $5 million. Properties over $5 million incur an additional 4% tax, while properties costing more than $10 million have an extra 5.5% tax—with the tax typically being paid by the seller. Selling Sunset star Emma Hernan told Fortune this tax has been a “nightmare” and has taken business away from agents. 

But it’s not just California that’s experiencing major home value growth. Other states that boast dozens of million-dollar cities include New York, New Jersey, and Florida, which is also unsurprising—but New York has just 66 of such cities, New Jersey has 49, and Florida has 32. That’s a far cry from the 200-plus cities in California with $1 million median home prices. 

How million-dollar cities affect housing affordability

Zillow’s report shows just how challenging it is for prospective homebuyers hoping to land a house in a major city. For many, a $1 million home is completely out of reach, even if you’re just considering how much a down payment would be. Putting down a mere 10% would set a buyer back $100,000, which is light-years away from what an average American has in savings. Indeed, a GoBankingRates survey from January shows that nearly half of Americans have less than $500 in their savings account.

Even purchasing a starter home is completely out of reach for many Americans, and some experts argue these types of houses don’t even exist anymore, considering how high mortgage rates and home prices have gotten. 

“Homes are now harder to come by, especially affordable homes,” McDermut says. “If you look at the concept of ‘starter homes,’ they have become nearly nonexistent in most markets.”

And not being able to afford a home just makes financial matters worse in the long run. That’s because Americans rely so heavily on home equity to bolster their finances and their ability to purchase a better or more expensive home in the future. 

“This situation can push buyers to either extend their search to more affordable areas, potentially increasing commute times and reducing quality of life, or to continue renting, which can make it harder to build equity over time,” Naghibi says. “Most Americans build their large portion of their net worth from the equity they build in their homes over time. If they can’t buy homes until later in life due to the cost, that means we are creating a lower average net worth.”