Why Starter Homes Now Cost Over $1 Million
California has always been one of the most expensive housing markets in the country, but the definition of a “starter home” has dramatically changed. Today, in many parts of the state, buyers must be prepared to spend $1 million or more just to get into the market. At LBC Mortgage, we guide buyers through this new landscape with expert advice, personalized loan solutions, and a deep understanding of California’s evolving market.
Home prices have surged due to a combination of limited housing inventory, strong demand, and low interest rates in recent years. Even as interest rates rise, the lack of affordable housing keeps prices high. In major metro areas like San Francisco, San Jose, and Los Angeles, a modest three-bedroom home in a middle-class neighborhood now comes with a seven-figure price tag.
What This Means for First-Time Buyers
More Competition, Fewer Options
With starter homes priced at $1 million or more, first-time buyers face intense competition. Investors and move-up buyers often have more resources, pushing many newcomers out of the running. Even buyers with strong incomes may find it difficult to compete without large down payments or all-cash offers.
Higher Barriers to Entry
Affording a million-dollar home requires a substantial income, excellent credit, and significant savings. Many first-time buyers are surprised by the added costs beyond the purchase price, including property taxes, insurance, and maintenance. These ongoing expenses can add thousands to monthly housing costs.
How LBC Mortgage Helps You Break Into the Market
We understand the challenges California buyers face, especially when it comes to million-dollar starter homes. Our team specializes in helping first-time buyers secure competitive financing options that other lenders might overlook.
Access to Creative Loan Solutions
We don’t just offer standard loan programs. LBC Mortgage evaluates your full financial picture to match you with creative financing options, including jumbo loans, down payment assistance programs, and bank statement loans. We know how to structure deals to improve your chances of approval.
Faster Closings and Personalized Guidance
Speed matters in California’s fast-moving housing market. We’re known for closing deals quickly, often ahead of schedule. Our team provides hands-on guidance from pre-approval to closing, so you never feel overwhelmed by the process.
The Changing Face of California Neighborhoods
Formerly Affordable Areas Are Now Luxury Markets
Neighborhoods that once offered affordable entry points have seen dramatic price increases. Cities like Oakland, Long Beach, and parts of the Inland Empire now routinely see million-dollar listings. This trend has pushed many buyers farther out from city centers in search of value.
Gentrification and Limited New Construction
Gentrification plays a major role in rising home prices. As new amenities and investment flow into previously overlooked areas, prices rise quickly. Meanwhile, strict zoning laws and limited land availability restrict new home construction, adding more pressure to the existing housing supply.
The Role of Jumbo Loans in Today’s Market
What Is a Jumbo Loan?
A jumbo loan is a mortgage that exceeds the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In most parts of California, that limit is $766,550 as of 2025. Any mortgage above that amount is considered a jumbo loan.
Why Jumbo Loans Are Now the Norm
With so many homes priced above $1 million, jumbo loans have become a standard tool for buyers. However, these loans come with stricter credit requirements and larger down payments. That’s where we come in. We work with lenders that offer flexible jumbo loan solutions tailored for first-time buyers.
What Buyers Can Do to Prepare
Get Pre-Approved Early
In a competitive market, pre-approval isn’t optional—it’s essential. It shows sellers you’re serious and financially ready. At LBC Mortgage, we offer fast, reliable pre-approvals that give you a competitive edge.
Improve Your Credit and Save Aggressively
A strong credit profile helps you qualify for better rates. Reducing debt and increasing savings are two of the best moves you can make before starting your home search. We’ll help you assess your credit and create a roadmap for improvement.
Work With a Broker Who Knows the Market
We have years of experience navigating California’s unique real estate landscape. Our brokers understand local trends, lending requirements, and negotiation strategies. We make sure your offer stands out and your financing is rock-solid.
Contact Us Today
The rise of million-dollar starter homes in California is more than just a headline—it’s a reality for today’s buyers. But with the right strategy and support, it’s still possible to enter the market confidently. At LBC Mortgage, we specialize in helping buyers overcome high barriers and make smart financial moves.
If you’re ready to explore your options, reach out to us today. We’ll help you turn the dream of homeownership into a reality, even in California’s most competitive markets.
