Starter homes in California, once considered an accessible entry point into homeownership, have now become largely out of reach for the average buyer due to soaring property values and limited housing supply. According to a new report from Redfin, the state’s least expensive homes are increasingly being purchased by wealthier buyers, effectively shutting out first-time homeowners. Over the past five years, the median income of buyers purchasing homes in the “starter” category has jumped a staggering 65%, outpacing wage growth and further compounding the affordability crisis in cities like San Francisco, Los Angeles, and San Diego.
Analysts point to a combination of high demand, low inventory, and rising mortgage rates as key drivers behind the trend. Entry-level homes are now often snapped up by investors or well-off buyers who can pay in cash or make offers above asking, leaving fewer options for lower-income residents. In some areas, competition is so intense that starter homes receive multiple offers within days, sometimes pricing out local buyers entirely. As California grapples with its housing shortage, experts say policy changes are urgently needed to create more affordable units and preserve access to homeownership for future generations.
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