The share of all U.S. homes worth $1 million or more hit a record 8.5%, up from 7.6% last year and 4% before the pandemic, according to a new analysis from Redfin. California is adding new cases faster than other states.
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In some markets, a $1 million home is considered luxury property, but the number of places where this is still the case has been shrinking.
The number of homes valued at $1 million or more in the U.S. hit a new high, with 8.5% of homes reaching that value, according to data provided by Redfin. wall street journal.
Last year, the share of U.S. homes priced at $1 million was 7.6%. Before the pandemic, it was just 4%.
As home prices soar across the country, more and more homes are reaching their once-high prices. Median home sales increased 4% year-over-year in June to a record $442,525, according to Redfin. At the same time, the median sales price of luxury homes (i.e., those in the top 5% of the market) increased by 9% year-over-year in the second quarter of 2024, reaching a record high of $1.18 million.
“A few years ago, if you owned a home worth $1 million, you were considered very wealthy,” Redfin economist Li Chen told reporters. wall street journal. “Now, that’s the entry point for some markets.”
Redfin reports that while homebuying demand has softened in recent quarters due to high mortgage rates, prices have continued to rise due to low inventory, which has increased competition. Inventories have increased in recent months but remain about 30% below pre-pandemic levels.
The growing share of $1 million homes in the U.S. is a good thing for homeowners and sellers because it means they have more equity in their portfolios, but it also creates new opportunities for homebuyers, especially those purchasing their first home. Homebuyers present affordability challenges.
“House prices, insurance and mortgage rates have risen so much that many people are either being priced out of the market or are tired of making such monthly payments,” said Julie Zubiate, a broker with Redfin Premier in the Bay Area. High fees.
“The people who didn’t hesitate to buy were from the tech industry, working at Google, Apple, Facebook, or similar companies. Many Bay Area buyers—especially those without the technology capital—have become more picky if it shows up during inspections. Small problems and they jump ship. They spend too much money rationalizing not having everything on their must-have list.
Redfin notes that recent declines in mortgage rates have helped improve affordability for buyers, adding tens of thousands of dollars to their purchasing power. That decline is bringing some buyers back into the market, Zubiat said.
The share of homes priced at $1 million is also growing in most major U.S. metros, with the exception of Austin, Texas, where the share fell 0.1% year over year; Indianapolis, Indiana; and Houston, Texas The share of homes priced at $1 million remained unchanged year over year. In Texas, a push for new construction has helped keep prices in check.
Meanwhile, California already has the largest share of homes valued at $1 million or more and continues to acquire them at a faster rate than anywhere else in the country.
Anaheim had the largest annual increase in $1 million homes, with 58.8% of homes meeting that threshold, up from 51% a year ago. Next, the largest annual increases in $1 million homes were in San Diego (from 36.5% to 42.6%) and Los Angeles (from 35% to 39.3%). In these markets, the median home price is already around $1 million, meaning many properties are expected to reach or exceed that level.
The Golden State also has the metro areas with the most $1 million homes — in San Francisco and San Jose, about 80% of homes are worth at least $1 million, while in Anaheim, 58.8% are worth at least seven figures.
However, there are still some metropolitan areas with few $1 million homes, including Detroit, Cleveland, Pittsburgh and Kansas City, Missouri.
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