Housing platform app Zillow reports there are now 233 locations in the U.S. where a simple “starter home”—a smaller, less-expensive route to owning a larger house—will now run you $1 million or more. The increase represents a dramatic rise from five years ago when there were only 85 cities with million-dollar starter homes. The implications include significantly higher down payments, elevated monthly mortgage payments and more difficulty for low- and middle-income buyers to get on the path to homeownership. 

And it’s not just a California problem, wrote Zillow economic analyst Anushna Prakash. New York, New Jersey, Florida, Massachusetts, Washington, and Texas now boast cities in the million-dollar-starter-home club. This is even more evidence that the housing affordability crisis is “here to stay,” according to new research from Oxford Economics. 

In a briefing this month, the firm reported the national Housing Affordability Index (HAI) was 72.8 in the last quarter of 2024, which means a household that earns the U.S. median income of about $80,000, only had 73% of the money it would need to afford a median-priced home. That means a prospective homebuyer would need a pay hike of about $30,000 to make it work at that home price. 

And there are no quick fixes on the horizon, according to Oxford Economics. Even if home prices stay flat this year, the HAI isn’t projected to approach the affordability threshold until after 2035. Other factors like higher property tax and insurance, low housing inventory, and poor prospects for lower mortgage rates are also major factors. 

According to Federal Reserve Economic Data, the median home price has risen 31% in the past five years. In 2020, the median sales price was $317,000 compared to the current median price of $416,900. Even though that price is down from its late 2022 peak of $442,600, prices are still significantly higher than they were five years ago. 

Builders have also signaled that President Trump’s tariffs won’t do hopeful homebuyers any favors. Tariffs on imported goods are projected to have a cost impact of $10,900 per home, according to a National Association of Home Builders and Wells Fargo Housing Market Index survey. 

D.R. Horton, a $39 billion homebuilder, missed earnings estimates this month and cut its revenue forecast for the year down to $33 to $34.8 billion from $36 billion to $37.5 billion. 

CEO Paul Romanowski told investors the spring home-selling season, usually the busiest period for buyers and sellers, is suppressed because of plunging consumer confidence and affordability issues. 

“This year’s spring selling season started slower than expected, as potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence,” Romanowski said. ““We expect our incentive levels to remain elevated and increase further, the extent to which will depend on market conditions and changes in mortgage interest rates.”