There are More Million-Dollar Homes in the US Than Ever Before

Record-high home prices, driven by historically low inventory, have pushed the share of homes worth more than $1 million in the U.S. market to 8.5%, the highest share in history. Last year, 7.6% of homes were valued at more than $1 million and before the pandemic, only 4% of homes were worth more than $1 million, according to a Redfin report.

Despite high mortgage rates dampening demand, home prices have been rising for the past year, a particularly evident trend for homes that were already expensive.  The median sale price of U.S. luxury homes rose 9% year-over-year to a record $1.18 million in the second quarter, said Redfin. This has an outsized impact on the share of homes worth at least $1 million because a major portion of them have long been on the cusp of hitting the million-dollar mark and now have crossed that threshold, the company said.

Soft demand resulting from mortgage rates more than double pandemic-era lows, would typically push home prices down, noted the firm. However, inventory remains about 30% below pre-pandemic levels because many homeowners are locked in by low rates.

The share of homes worth at least $1 million rose year-over-year in all but three of the 50 most populous U.S. metros. The percentage of million-dollar homes fell in Austin, Texas, to 10% from 10.1% last year, a likely side effect of rampant new construction dragging price growth in the state. The share of homes valued at $1 million or more stayed the same in Indianapolis (2%) and Houston (3.6%).

Meanwhile, pricey California metros are gaining million-dollar homes faster than anywhere else in the U.S. In Anaheim, 58.8% of homes are now worth at least $1 million, up from 51% a year ago, said Redfin. The next-biggest increases are in San Diego (42.6%, up from 36.5%) and Los Angeles (39.3%, up from 35%). In these markets, median home prices have reached the $1 million mark and have now tipped over into the seven-figure category.

California is also home to the metros with the most million-dollar homes. In both San Francisco and San Jose, about 80% of homes are worth seven figures, followed by Anaheim, with 58.8% of its homes worth more than $1 million, Redfin said.

Bargain hunters will still find options in fairly inexpensive metro areas, where less than 1% of homes are worth $1 million, including Detroit, Cleveland, Pittsburgh and Kansas City, Missouri.