$1 million starter homes, a flipping rebound and California’s quiet Boomtowns

First-time buyers need at least $1 million in many cities in California

The California dream could cost you. A lot.

Starter homes are $1 million or more in more than one of every five cities in California, creating a huge financial challenge for hardworking residents saving enough money for a downpayment.

The aptly named Golden State has 105 cities where so-called starter homes – considered the bottom one-third of homes sold – where the median-home price is $1 million and often much more, according to a recent Zillow report.

California has almost half of the 242 cities with million-dollar starter homes nationwide; New York state has 42.

The Bay Area — San Francisco and San Jose — has 50 cities where the median price for a starter home is $1 million or more. California. Los Angeles has 33.

Double the number of cities with million-dollar starter homes

The state has twice as many million-dollar homes today than six years ago (February 2020), when 53 cities were above the starter-home threshold, according to Zillow. 

Affordability has been an ongoing concern for entry-level – also known as first-time – buyers, especially as they attempt to save enough money for a downpayment. 

Fewer than one of every five, regardless of income level, can afford to buy the median-priced home in California, according to the California Association of Realtors. In some markets, such as the Central Coast and Orange County, the affordability rate dips into the teens or even single digits.

Home-flippers assume a lot of risk — in hopes of a good payday. ADOBE STOCK

Home-flipping gains bounce from lows

Home-flipping has a pulse. But it’s still rather weak.

California had 5,774 flipped homes during the first quarter, a 3% increase compared to a year ago – and ending several quarters of declining activity, according to ATTOM Data.

But home-flippers care more about the bottom-line, and those numbers are a bit better. The average home-flipper in the state enjoyed a $124,438 profit in the first three months of the year, with a better-but-still-meh 19.5% return on the deal.

California’s profit margin was double the national average, but the return on investment was off 5 percentage points. 

“The first increase in flipping returns in nearly two years is a welcome sign for investors,” said ATTOM CEO Rob Barber. “The market remains far more competitive than it was during the peak profit years, but this quarter’s gains suggest that conditions may be stabilizing. Success still depends heavily on local market dynamics, with some metros producing strong returns while others remain difficult places to flip profitably.”

Hard work and a lot of risk for a $40,000 payday?

California is an excellent example of solid and struggling flipping markets. For example, Bakersfield generated 40% returns for investors, while Los Angeles and San Jose flipped endured profit-margins in the high teens.

Those three markets had returns slightly lower than their annual average for 2025. 

Flippers in the other eight major metros – from the Bay Area and the Sacramento region to San Diego – enjoyed better first-quarter returns than a year ago.  San Francisco had the third-best profit margin at 30% (see table, below) and the largest gross profit at $279,420 in the state.

But home-flippers – or those just dreaming of buying, fixing up and selling a home – should remember that the gross profit is based on the purchase price compared to the sale price, and doesn’t include home-improvement repairs, interest on loans, sales commissions and taxes. Those costs cut into profits, often taking as much as 50% to 65% of the money. 

So, the average California home-flipper may have walked away with as little as $40,000 to $50,000 after home-improvement repairs and the other costs. 

Idaho home-flippers are upside down

Nationwide, the average home-flipper had a 25.4% profit margin, a slight increase from 24.7% in the fourth quarter, the lowest point since 2008. 

They also had a gross profit of $66,000, better than the previous quarter but down from $74,200 a year ago.  

Of course, like all housing deals, location matters, a lot. 

Home-flippers in Pennsylvania and Louisiana enjoyed returns of 70% and 68%, respectively. In Idaho, the average home-flipper was upside down, with a return of less than 3%, with Montana, Texas and Utah not faring much better with profit margins in the 5%-6% range.

City	Flipped homes	Gross profit	Profit margin
California	5,774	$124,438	19.5%
Bakersfield	194	$95,000	40.0%
Fresno	164	$105,000	39.0%
Los Angeles	1,836	$150,641	17.2%
Riverside	876	$109,250	23.8%
Sacramento	413	$110,000	26.2%
San Diego	618	$220,875	27.0%
San Francisco	497	$279,420	29.6%
San Jose	239	$267,000	18.0%

Source: ATTOM Data

Sunnyvale boasts a booming economy and an expanding workforce. ADOBE STOCK

Welcome to the Boomtowns: Four California cities crack economic list

California has few boomtowns, with fast-growing economic and job growth and stronger-than-most home construction. 

But four cities – Menifee, Rancho Cordova, Santa Clara and Sunnyvale – cracked SmartAsset’s Boomtown list, barely.

The financial site crunched data of more than 400 cities nationwide with at least 65,000 residents to determine the so-called Boomtowns from the Bay Area to Portland Maine.

Each city received a composite score based on five-year changes in three factors: economic output, housing units and labor force size.