The Share of Million-Dollar Homes in America Just Hit an All-Time High

The rise in $1 million properties is the result of historically high home prices across the country; the median home sale price rose 4% year-over-year to a record $442,525 in June, Redfin’s data show. The median sale price for U.S. luxury homes, defined as the top 5% of listings, rose 9% year-over-year to a record $1.18 million during the second quarter, according to the company.

“Years ago, if you owned a $1 million home, you would have been considered pretty rich,” said Redfin economist Chen Zhao. “Now, that’s the entry point for some markets.”

While rising mortgage rates have pushed down demand for homes, a shortage of inventory is keeping prices at historic highs, said Zhao, noting that the housing market is in a “pretty unusual spot right now.” That is good news for homeowners, but makes the market even more challenging for buyers already facing an affordability crisis, she said.

The San Francisco Bay Area has a higher share of $1 million-plus homes than anywhere else in the U.S. In San Francisco, 80.6% of homes were valued at or above $1 million in June, according to Redfin’s data, up from 76.4% in June 2023.

California, already home to the biggest share of $1 million-and-up homes, continues to add them faster than any other state. For instance, Anaheim, Calif., saw one of the biggest increases in $1 million-plus housing stock, with 58.8% of homes estimated to be worth at least $1 million in June, up from 51% in June 2023.

Bay Area real-estate agent Rose Hayes, who is listing a $1.05 million two-bedroom condo in an 1800s-era carriage house in the Mission District of San Francisco, said she now assumes that any buyer in the area with a $1 million budget is looking for a condo, since they likely couldn’t afford a single-family home. Anything in the area priced under $1 million is likely to get a lot of attention, and such listings often come with complications, such as existing tenancy agreements that buyers would need to take on, she said.

“It’s so hard to find anything for under $1 million out there,” she said.

Only one of the U.S. metro areas surveyed by Redfin saw a decline in the share of $1 million homes. In Austin, Texas, 10% of homes are now worth $1 million or more, down incrementally from 10.1% last year. Redfin attributed that drop to new construction in Texas that has pushed up supply.

There are now only a handful of major metro areas with virtually no homes estimated to be worth $1 million or more. In Detroit, Cleveland, Pittsburgh and Kansas City, Mo., fewer than 1% of homes were worth seven figures in June, Redfin’s numbers show.

While inventory is finally inching up across the country, it is still about 30% below prepandemic levels, according to Redfin. That is because sellers are locked into low interest rates, while construction costs remain significantly higher than before Covid, putting a damper on new construction.

Via The Wall Street Journal