A record number of U.S. homes are now worth $1 million or more
To understand how unattainable home prices have become for many buyers, look no further than the share of homes across the country worth at least $1 million. Since the start of the pandemic, the share of homes worth $1 million or more has doubled, with a record 1 in 12 properties now worth above that figure, according to a new analysis.
Four cities — all in California — are now places where more than half of properties are worth above $1 million, real-estate company Redfin found in its analysis of housing values. Prior to the pandemic, only San Francisco boasted a property market where a majority of homes had crossed the million-dollar threshold.
- San Francisco: 89% of homes worth $1 million or more
- San Jose: 86%
- Anaheim: 55%
- Oakland: 55%
Across the nation, about 8.2% of homes in February were valued at $1 million or more, or about 1 in 12 properties, Redfin found. That's almost double the share of million-dollar homes prior to the pandemic, when about 4.8% of homes were worth at least that much, the analysis found.
The pandemic has ushered in a new type of housing crisis, where homes are increasingly out of reach for first-time homebuyers. A shortage of homes for sale is leading to cut-throat competition in the market to buy a property, just as millions of millennials are seeking to buy their first homes and as the switch to remote work is allowing more white-collar workers to relocate.
Current homeowners are reaping the benefits of soaring home values, since the trend provides them with more equity that they can then leverage when buying another home with proceeds from their existing home's sale. But it's also increasingly making first-time home buying an unaffordable proposition.
"The surge in housing values has turned many homeowners into millionaires, but has pushed homeownership out of reach for a lot of other Americans," Redfin deputy chief economist Taylor Marr said in a statement.
Incomes aren't keeping up
The analysis of million-dollar home values is based on a Redfin model that relies on public records, MLS data and Redfin's pricing calculations to estimate the values of 85 million properties across the nation.
While real estate prices have soared during the past two years, incomes haven't kept up the same pace.
The median weekly income of U.S. workers has jumped almost 12% since the end of 2019, just before the pandemic started, according to Department of Labor data.
But the median sale price for a U.S. house has jumped 25% during the same period.
Sellers are also asking more for their homes: The median listing price for properties hit a record $392,000 in February, according to a recent analysis from Realtor.com. That's an increase of 13% compared with a year earlier, and a jump of almost 27% from February 2020, right before the pandemic hit the U.S., their analysis found.
Where million-dollar listings have surged
A handful of cities have seen particularly sharp increases in their share of million-dollar properties, the Redfin analysis found.
Chief among them is Anaheim, where 55.3% of homes were worth at least $1 million in February, compared with about 27% two years earlier.
The market with the second-biggest jump in share of million-dollar homes is San Diego, with a 22 percentage point jump to about 40% of properties now worth more than $1 million. Seattle saw the third-biggest increase, with its share jumping 21 percentage points to almost 37% of homes.
Anaheim's surge in million-dollar homes comes as the city grapples with a shortage of inventory, Redfin said. The number of homes for sale in Anaheim plunged more than 40% from a year earlier, one of the biggest inventory drops in the nation.
"This week, one of my buyers offered $1.57 million for a Costa Mesa home listed at $1.5 million," Redfin real estate agent Linda Tessitore said in the statement, referring to a California town near Anaheim. "The seller came back and said they'd need to offer at least $1.75 million to compete. My client opted to look elsewhere because they couldn't afford to go $200,000 over their budget for an 1,100 square-foot home."
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