Record-Breaking: Nearly 1 in 10 U.S. Homes Valued at $1 Million or More

The real estate market in the United States has seen a significant surge in the number of million-dollar homes, with nearly one in ten homes now worth at least $1 million.

The real estate market in the United States has seen a significant surge in the number of million-dollar homes, with nearly one in ten homes now worth at least $1 million. This surge is a result of rising property prices, which have doubled the share of high-value homes since before the pandemic, according to a recent report from Redfin.

Prior to the pandemic, only around 4% of homes surpassed the million-dollar mark. However, this number has skyrocketed to over 8% since then, nearing the all-time high of 8.6% in June 2022. Although there was a slight dip in February when only 7.3% of homes reached this threshold, prices have been on a steady incline on a year-over-year basis ever since.

In July, the median home-sale price in the U.S. increased by 3% compared to the previous year, marking the largest increase since November. Luxury homes have experienced even higher price growth, with a 4.6% year-over-year increase in the second quarter, bringing the median sale price to $1.2 million.

However, these rising prices have created challenges for homeowners looking to secure lower mortgage rates. Elevated mortgage rates have limited their options, resulting in scarce inventory and fierce competition among buyers. As a result, affordability issues persist, as buyers try to navigate the market amidst high rates.

According to the July Monthly Housing Market Trends Report from Realtor.com, the number of homes actively for sale decreased by 6.4% compared to the previous year. This further exacerbates the already limited options available to potential homebuyers, driving up prices even more.

Notably, the share of million-dollar homes has doubled from pre-pandemic levels, particularly due to the surge in home prices during 2020 and 2021. This surge was fueled by record-low mortgage rates and the shift towards remote work, which prompted many Americans to invest in real estate.

In some regions, particularly on the East Coast, the rise in million-dollar homes has been even more pronounced. For example, in the Bridgeport, CT metro area, 25.8% of homes are now valued at $1 million or more, compared to 23.1% a year ago. Boston and Newark saw the share of million-dollar homes increase from 20.3% to 21.5% and 8.7% to 9.7%, respectively. Nationally, 55 out of the 99 most populous U.S. metros experienced a year-over-year rise in the number of million-dollar homes, although the increase was less than one percentage point in most cases.

On the other hand, expensive coastal metros have witnessed a decline in the share of million-dollar homes. Seattle recorded the biggest drop, from 39.3% to 33%, followed by Oakland, CA (55.1% to 49%) and Oxnard, CA (40.2% to 34.5%). Other metros such as Los Angeles, San Diego, San Jose, San Francisco, Anaheim, New York, and Washington, D.C. have also seen decreases in the number of high-value homes. However, despite these declines, California still possesses the highest share of million-dollar-plus homes in the country.

In contrast, there are several areas across the country where million-dollar homes remain scarce. Inexpensive metros, particularly in parts of Texas and upstate New York, have very few homes valued at $1 million or more. For instance, Omaha, NE; Dayton, OH; McAllen, TX; El Paso, TX; Akron, OH; Detroit; Buffalo, NY; Elgin, IL; and Rochester, NY all have a share of 0.5% or lower in terms of million-dollar homes.

The real estate market in the United States has witnessed a notable increase in the number of million-dollar homes, nearing 10% of the overall market. This surge in high-value properties can be attributed to the rising prices since the pandemic, which have more than doubled the share of million-dollar homes. While some regions on the East Coast have experienced significant growth, expensive coastal metros have seen a decline in these properties. Moreover, there are still areas across the country where million-dollar homes remain relatively rare. With the ongoing challenges of limited inventory and affordability issues, the market continues to present obstacles for potential homebuyers.