A $1 million starter home is the norm the in some WA cities

Depending on where you live, $1 million might not be enough to get you a starter home, including in some parts of the Seattle metro area.

KING COUNTY, Wash. - Buying your first home and the feeling of getting those keys for the first time, it’s the ultimate American Dream. But the reality of that dream is costing a lot more nowadays.

Depending on where you live, $1 million might not be enough to get you a starter home.

Real estate company Zillow found that million-dollar starter homes are now the norm in 237 cities. That’s up from 84 cities pre-pandemic, and eight of those cities are in Washington.

"Generally, cities with million-dollar starter homes are concentrated in markets that tend to not build enough housing to keep with demand, the Seattle metro area happens to be one of them," said Zillow Senior Economist Orphe Divounguy.

The data is based off of the Seattle metro area, which is comprised of Pierce, King and Snohomish counties.

A starter home is defined as those in the lowest third of home values in a given region, according to Zillow. Half of the million-dollar starter homes are in California, followed by New York, New Jersey, Florida, Massachusetts and Washington. The report also found starter home values increased by 54% over the past five years.

"The region has seen affordability getting strained over time simply because while incomes rise to push demand for housing higher, supply tends to lag," Divounguy said.

For perspective, the typical starter home is worth $196,611 nationwide, according to Zillow. That means you could buy five of those houses for the price of one in some cities in Washington.

Divounguy believes the solution comes from building more. "As inventory rises and more homes come on the market, we’ll likely see price growth ease to allow incomes to catch up and that will likely improve housing affordability slightly in the medium to long term," Divounguy said.

In the meantime, there are tools to help prospective home buyers. For example, Zillow has payment assistance programs on all of its listings. It also has a new tool called "BuyAbility" that allows people to insert their credit score, and it will fluctuate as interest rates change.

Experts recommend starting early with the financing process and getting pre-qualified. A loan officer can help prospective buyers find out what they can afford, and a real estate agent can help them find what homes are in their budget.

"With the feds cutting the interest rates later this year, I think a lot of people expect the mortgage rates will decline. Unfortunately, it’s unlikely mortgage rates will be the source of the solution to the housing market," Divounguy said.