For first-time homebuyers, buying a starter home in California feels more like a fantasy than the first step toward the American dream.
Known for its coastal beauty, booming tech economy, and year-round sunshine, the Golden State also ranks among the most unaffordable in the nation. Housing prices are well above the national average and scarce starter home construction have created an uphill battle.
But there is hope, if you’re making at least a six-figure salary.
What It Costs To Afford a Starter Home in California
In 2024, the average cost of a starter home in California was $497,780. To purchase a home with a 7% mortgage rate and a 10% down payment, buyers need to earn at least $119,223 annually—making California second only to Hawaii in salary demands.
This income requirement is nearly $50,000 higher than the national average needed to afford a typical starter home. Compared to nearby states like Arizona ($94,731) or Oregon ($105,877), California poses a much greater financial challenge. To be blunt: it’s certainly not among the most affordable states to live.
The state also leads the U.S. in the number of cities where the median starter home costs more than $1 million. As of 2024, 77 cities fall into this category—accounting for nearly a quarter of all metro areas surveyed.
TRY! Best and Worst Places in California for Starter Homes
Despite the state’s sky-high prices, a few pockets still offer entry points for budget-conscious buyers:
- Bakersfield – With median home prices typically under $350,000, this Central Valley city is one of the most affordable in the state.
- Fresno – Homes average around $400,000 and the slower-paced housing market can be a relief compared to the coast.
- Redding – Located in Northern California, this city offers more inventory with median prices near $375,000.
On the flip side, some areas are completely out of reach for those hoping to buy their first home:
- Malibu – A starter home here runs about $4.8 million.
- Beverly Hills – Median prices are also close to $5 million, far beyond what most consider a starter.
- Pacific Palisades – Even after recent wildfires, homes still list for over $2 million.
These astronomical prices not only stretch the definition of a starter home—they completely redefine it.
Is Buying a Starter Home in California Worth It?
For many, purchasing a home in California means relying on financial help, such as a co-borrower or significant family gifts. Mortgages for first-time homebuyers and down payment assistance programs are available, but often fall short of bridging the affordability gap.
Despite these challenges, long-term investment potential remains in some areas due to high demand and restricted land availability. However, California earned an “F” on the Realtor.com® home ownership report card, citing poor affordability and weak new construction. Its Realtor.com Affordability Score sits at just 0.43, while even new homes are often priced below older inventory, thanks to targeted price controls.
For prospective buyers, mastering the steps to buying a house is essential. Pre-approval, budgeting, and exploring alternative home types—like condos or ADUs—can be key to success.
California is far from the easiest place to start your homeownership journey. Yet for financially prepared buyers who are flexible about location, the dream remains achievable—and potentially rewarding in the long run.
Carol McDaniel is a dedicated and results-driven professional with 5 years of experience and US News. Known for her strong problem-solving skills and collaborative mindset, Carol has built a reputation for delivering high-impact results across diverse teams and projects.
Throughout her career, she has demonstrated expertise in 2 core skills or areas, e.g., client relations and project coordination, and is passionate about continuous learning and meaningful contribution. Carol thrives in dynamic environments and consistently brings professionalism, adaptability, and a focus on growth to every role she takes on.