Wonkblog reporter Emily Badger says that buying a first home can sometimes seem impossible, especially when entry-level housing can cost upwards of $700,000 in some metros. List prices of starter homes have been rapidly increasing; In Oakland, Calif., the median list price for an entry-level home has increased by 104% since 2012, Denver's is up 78%, and Portland has increased by 50%. This is mostly due to the decreased supply of starter homes on the market, but may be more heavily impacted by the prices for higher-priced homes.
In markets like Oakland, Portland and Washington, the prices for high-end homes are rapidly rising — the rungs of the ladder are moving farther apart — and that makes it harder for people who own mid-tier homes to trade up. And when they get stuck, people who own starter homes have a harder time trading up, too. Rising prices also mean that buyers have to settle for smaller homes. So now we have buyers who could have afforded something nicer five years ago competing for what should be starter homes. We have people in San Francisco shelling out $700,000 for cramped condos.