According to a new analysis from Redfin, 8.5% of all U.S. homes are worth more than $1 million, a record high, up from 7.6% last year and 4% pre-pandemic, and California is adding homes worth more than $1 million at a faster rate than any other state.
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In some markets, a million-dollar home is considered luxury property, but there are fewer and fewer places where that’s still the case.
The number of homes in the US estimated to be worth more than $1 million has hit an all-time high, with 8.5% of all homes now worth that much, US data has revealed. Redfin Provided The Wall Street Journal.
Last year, 7.6% of homes in the US were priced at $1 million, up from just 4% before the pandemic.
As home prices soar across the country, more homes are commanding what were once steep price tags. The median home sales price rose 4% year over year to a record high of $442,525 in June, according to Redfin. Meanwhile, the median sales price of luxury homes, which make up the top 5% of the market, rose 9% year over year to a record high of $1.18 million in the second quarter of 2024.
“A few years ago, if you owned a million-dollar home, you were considered quite wealthy,” said Chen Chao, an economist at Redfin. The Wall Street Journal“Now, that’s an entry point into some markets.”
High mortgage rates have weakened homebuying demand in recent quarters, but prices continue to rise as inventory is low, increasing competition, the Redfin report said. Inventory has increased in recent months but is still about 30% below pre-pandemic levels.
The increase in the percentage of million-dollar homes in the United States is good for homeowners and sellers because it means increased asset values in their portfolios, but it also increases the challenges of homebuying for homebuyers, especially first-time homebuyers.
“Home prices, insurance and mortgage rates have skyrocketed, leaving many people priced out of the market or tired of high monthly payments,” said Julie Zubiate, a Bay Area-based agent with Redfin Premier.
“The people who are buying without hesitation are in the tech industry and work for companies like Google, Apple and Facebook. A lot of buyers in the Bay Area, especially those without tech funds, are becoming more cautious and will replace anything they find with an inspection or whatever, as soon as they find a small problem. They’re spending too much money to justify not having everything they absolutely want.”
Redfin noted that recent declines in mortgage rates have given buyers tens of thousands of dollars more purchasing power, making it easier to buy a home. Zubiate said the declines in interest rates are encouraging some buyers to get back into the housing market.
The share of homes priced at $1 million also increased in most major U.S. cities except Austin, where it fell 0.1% from a year ago, and was stable in Indianapolis and Houston, where a push for new home construction has helped keep prices down.
Meanwhile, California, which already has the largest percentage of homes valued at more than $1 million, continues to add more homes valued at $1 million or more than any other state in the country.
Anaheim saw the largest year-over-year increase in million dollar homes, increasing 58.8 percent from 51 percent a year ago. San Diego (up 36.5 percent to 42.6 percent) and Los Angeles (up 35 percent to 39.3 percent) then saw the largest annual percentage increases in million dollar homes year-over-year. In these markets, the median home price is already around the $1 million mark, meaning many properties are poised to reach or surpass that mark.
California also has the most metropolitan areas with the most million-dollar homes: In San Francisco and San Jose, about 80% of homes are worth more than $1 million, and in Anaheim, 58.8% are worth seven figures or more.
But there are still some metropolitan areas with very few million-dollar homes, including Detroit, Cleveland, Pittsburgh and Kansas City, Missouri.
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Email Lillian Dickerson
