A new Zillow report shows starter homes costing $1 million are becoming the norm in more than 200 cities in the United States. Zillow Home Loans senior economist Orphe Divounguy joins Wealth! to discuss the report and his advice for first-time homebuyers.

Divounguy explains that in many cities, it will take a lot more "to step on the first rung of the housing ladder." He notes that these cities are mostly concentrated in expensive coastal markets where homeownership rates are some of the lowest in the country. These markets are also where the most restrictive building regulations are, further squeezing the already-low supply available to buyers.

He adds that across the country, "homeowners are sitting on near-record home equity and the real value of their mortgage interest payments has actually declined during the pandemic." Meanwhile, the wealth of renters pales in comparison to the wealth of homeowners as wages increased much slower than rents. Thus, Divounguy explains that "the benefits of buying are still there for most people." His advice to homebuyers is to "start early on your journey to homeownership," by getting pre-qualified and working with a loan officer to identify how to secure the lowest possible mortgage rate.

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This post was written by Melanie Riehl