Cities with million dollar starter homes hit a new record

More million dollar opportunities

Here's something we never expected to write: there has never been a better time for agents to break into luxury real estate.

In February 2020, 80 U.S. cities had million-dollar starter homes. Today, there are 242.

That means luxury-priced homes aren't confined to Beverly Hills, Manhattan, or Palm Beach anymore — they're showing up in markets agents wouldn't have called "luxury" five years ago.

And yet, agents are leaving the industry in droves.

In today's Blueprint, we explain why both are happening at once — and how to make sure you're capitalizing on the opportunity rather than getting left behind.

- James

242 US cities now have starter homes that cost $1M

A record 242 U.S. cities now have starter homes valued at $1 million or more. That’s up from 80 cities before the pandemic and 226 cities just a year ago, according to Zillow’s latest analysis. 

Here are the key takeaways Zillow reports:

• A post-pandemic price reset: The number of cities with million-dollar starter homes has jumped from 80 before the pandemic to 242 today. Just one year ago, the count stood at 226, showing that affordability pressures continue to spread rather than recede.

• No longer just a coastal story: In 2020, only nine states had at least one city with a $1 million starter home. Today, that number has grown to 26 states, with places like Texas, Wyoming, and Illinois now appearing on the list.

• The Northeast is accelerating fastest: New York and New Jersey added 15 cities with million-dollar starter homes over the past year alone. Zillow says years of underbuilding and limited inventory have kept competition elevated across much of the region.

• California still leads by a wide margin: California accounts for 105 of the 242 cities on the list, followed by New York (41) and New Jersey (26). The New York City metro alone contains 63 cities where a typical starter home is now worth at least $1 million.

• Buying is closing the gap with renting: The typical buyer now breaks even versus renting after about six years, down from more than eight years in late 2023, as rent growth cools and price appreciation normalizes.

My take

Million-dollar starter homes are basically a symptom of supply not keeping up with demand — nothing too mysterious there. But here's the silver lining for agents: as more entry-level homes cross that $1M line, you're going to end up working luxury-priced deals even if you're nowhere near a traditional luxury market. Funny how that works. And affordability isn't just one-way bad news either — Zillow's analysis shows the typical buyer now breaks even versus renting after about six years, down from more than eight in late 2023. That's a number worth bringing up with any buyer who's still on the fence about pulling the trigger.

Prices are falling in 26% of the largest housing markets

Home prices fell in 77 of the nation’s 300 largest housing markets – 26% of markets – between May 2025 and May 2026. Still, U.S. home prices nationwide are up +0.8% year-over-year, with 223 markets posting mild gains. 

According to ResiClub, home prices are climbing in regions where active inventory remains well below pre-pandemic levels, like the Northeast and Midwest. 

Here are the top markets where home prices fell the most, YOY:

1. Punta Gorda, FL: -7.89%

2. London, KY: -7.11%

3. Cape Coral, FL: -6.10%

4. Austin, TX: -5.66%

5. Sarasota, FL: -5.26%

6. Wailuku, HI: -4.59%

7. Naples, FL: -4.44%

8. Fort Knox, KY: -3.70%

9. Asheville, NC: -3.63%

My take

Home prices fell in 77 of the 300 biggest housing markets over the past year, but don't read that as a crash — it's mostly the pandemic boom towns giving back gains that never matched local incomes. The pattern that matters: tight-inventory markets (Northeast, Midwest) keep grinding out small gains, while Sun Belt markets that overbuilt (Florida, Austin, Stockton) keep losing price, and that's structural, not a blip.

Free market data you can drop right into your listing presentations

Want instant credibility with clients? Show up with current, local market data. Zillow’s free interactive research tools give you the insights you need. Bring those visuals directly into your presentations and buyer conversations. Whether you're advising a seller on pricing strategy or helping a buyer understand what's happening in their target neighborhood, having clean, up-to-date data at your fingertips makes a real difference. It's free, it's always current, and it takes the guesswork out of the conversation.

Home flipping profits rise for the first time in nearly 2 years

After seven straight quarters of declining returns, home-flipping profits finally moved higher in Q1 2026. According to ATTOM, the typical flipped home generated a 25.4% profit margin, up from 24.7% in the previous quarter, marking the first quarterly increase since mid-2024.

A total of 64,348 single-family homes and condos were flipped during the quarter, accounting for 8% of all home sales nationwide. While flipping activity was down from a year ago, it represented a larger share of overall sales than in the fourth quarter.

Here are the markets with the highest profit margins from flipping homes, among large metros:

1. Pittsburgh, PA: 85.9%

2. Buffalo, NY: 84.0%

3. Virginia Beach, VA: 74.9%

4. Baltimore, MD: 65.9%

5. Philadelphia, PA: 62.0%

My take

It's encouraging to see flipping profits move higher for the first time in nearly two years. But the more interesting story is that investors never really left. Despite elevated home prices, high borrowing costs, and tighter margins, flipping activity actually accounted for a larger share of home sales than it did in the fourth quarter of 2025. In other words, experienced investors continued finding opportunities while many others sat on the sidelines. Keep that in mind as you read today's Foundation Plans. The best dealmakers don't wait for perfect conditions: they learn how to find opportunities in imperfect markets.

Schematics

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Foundation Plans

Advice from James to win the day

As I said last week, because agents are leaving the business in droves, I decided that over the next few editions, I will share what I believe will keep you from becoming one of them.

In the first installment, I shared certain mindset changes that have made the biggest difference in my career. In today’s installment, I want to get extremely practical. 

1. Stop chasing random clients – One of the biggest mistakes agents make is building a business around people who are waiting for the market to improve: They're waiting for rates to fall. Waiting for prices to come down. Waiting for more inventory. Waiting for more certainty. 

The problem is that when your pipeline is full of people waiting, your business ends up waiting too.

2. Become very intentional about the clients you seek out –  Instead, focus on finding the people who are still making decisions regardless of market conditions. A statistic from today's newsletter illustrates exactly what I mean. Despite elevated home prices, high borrowing costs, and tighter margins, home flipping activity represented a larger share of all home sales in the first quarter than it did in the fourth quarter of last year.

Think about that for a moment.

Experienced investors didn't sit around waiting for perfect conditions. They kept looking for opportunities while many others stayed on the sidelines. The same principle applies to your business. Every market has people who need and want to transact regardless of how perfect the market is. Those people are your opportunity.

Rather than trying to market to everyone, identify the groups in your market that are most likely to transact and make them your focus. Learn their problems. Understand their motivations. Know what keeps them up at night.

Then become the agent who understands their needs better than anyone else.

3. Become a dealmaker –  The agents who survive difficult markets aren't necessarily the most talented. They're the ones who consistently put themselves in front of people who are actually willing and able to do business.

Build your pipeline around those people, and you'll spend less time hoping for a better market and more time closing deals in the market you have.

Breezy

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Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Your time is limited, so don’t waste it living someone else’s life.” — Steve Jobs

Each day is a gift – a chance to live the life you want. Ruthlessly focus on your goals. Don’t let your past or the fear of being judged distract or paralyze you. Choose to live with an integrity that you can be proud of.

Have a wonderful weekend, and I’ll see you back here next Friday!

- James