Five years ago, there were 85 U.S. cities which had starter homes (in the lower third of prices) at more than $1 million. As you would expect, most of those were in California, New York, and Hawaii. As of March 2025, that number is at 233 cities!
Based on current economic conditions, we can't expect that total to drop by very much, even though it was 239 at the start of the year. The point is that this is where home prices may be headed. This impacts both the residential AND commercial side. Why?
At $1,000,000 even, the down payment would be as much as $200,000. That's the down payment. The mortgage would be approximately $6,500 per month. Think about that.
Meanwhile, some real estate professionals cannot seem to understand why some people are spending $2,500 to rent a nice apartment. It's true they lose out on tax benefits and that their place of living is not an investment. However, it's also true that they "save" a down payment of up to $200,000, "save" $4,000 each month on their cost of living, and have an easy option to relocate if there is a significant cost increase or their personal situation changes.
This is not to say that people should consider renting as their first option. It is to say that many people already are, and that trend may continue. All of this adds to the need to be more creative than ever when it comes to working in real estate.
I'm seeing more people working out seller financing and "Subject To" transactions. Those are tricky, but offer many solutions. I'm working on being able to expand those offerings, but there will also need to be an adjustment in the thinking about how real estate is purchased.
Stay tuned.....
https://www.zillow.com/research/million-dollar-start-home-2025-35100/
https://www.zillow.com/research/million-dollar-start-home-2025-35100/
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