Report shows entry-level homes costing nearly $1M

[00:00:00]A reality check for first-time home buyers. Prices for starter homes across the country have tripled in the last a few years. It's mostly inexpensive coastal locations, but a new report from Vizillo shows a record number of places now have entry-level homes that are priced listen to this at a million dollars or more. Evan Moon has how this market is changing.

[00:00:23]>> Is $1 million the new norm for a starter home? A new report by Zillow says in many cities it is. Starter homes are considered the lower third of home prices in any given area, and data shows 242 US cities face these affordability pressures. 26 states have at least one city with $1 starter homes. New York and New Jersey are the fastest growing states on the list, while California leads with 105 cities at this price range. CBS News business analyst Jill Schlesinger says first-time home buyers are facing several challenges.

[00:00:59]>> Prices have gone up, and so have mortgage rates, so has homeowners insurance. We're at the 6, 6 and 1/2% range. It's tough out there.

[00:01:07]>> Experts say a pandemic-era housing boom continues to fuel a housing shortage, driving up values.

[00:01:13]>> Just 5 years ago, and you say, "What share of income would it take to buy a house and live with it and pay a a certain amount every month?" It was about 30% of the average median income.

[00:01:24]>> Yeah.

[00:01:24]>> Now it's 43%.

[00:01:26]>> Housing economist Lisa Sturtevant says the average age of a first-time home buyer is now close to 40.

[00:01:32]>> Supply is a huge problem.

[00:01:34]>> There are a lot of communities out there that simply prohibit the construction of smaller homes, right? There are local zoning and land use ordinances.

[00:01:43]>> Sturtevant says in places like California, income inequality is also a factor.

[00:01:48]>> Even though there are teachers and firefighters and more moderate wage workers who want to purchase a home in those markets, if you have very, very rich people, they're able to bid up the prices of the those homes and and I think that's happening in many of those sort of San Francisco area markets in California.

[00:02:04]>> Experts suggest considering a 10% down payment instead of the standard 20% and weighing whether renting offers more flexibility in this current market. Evan Moon, CBS News.