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Real estate prices in the US have continued to rise, with a record number of homes reaching seven-figure prices.
Nearly one in ten, or 8.5%, of homes are now worth $1 million or more – the highest share ever, according to Redfin Data released on Friday. That’s more than 8 million U.S. homes valued at least $1 million in June, up more than 10% from a year ago and more than double the pre-pandemic figure.
Affordable housing has become one of the biggest burdens facing Americans in recent years, with home prices soaring, mortgage rates still more than double their 2022 lows, and supply remaining thin for prospective homebuyers.
“Real estate prices, insurance and mortgage rates have risen so much that many people can no longer afford the market or are tired of paying such a high monthly rate,” said Julie Zubiate, a Redfin (RDFN) Top-rated realtor in the Bay Area where most homes sell for at least $1 million.
The median sales price of a home increased 4% year over year to $442,451 in June. The national average interest rate for 30-year mortgages was 6.9%. Homebuyers are getting some relief through falling mortgage interest rateswhich have fallen steadily in recent weeks due to signs of an economic slowdown.
The trend toward million-dollar homes isn’t limited to one state or region. In all but three of the 50 most populous metropolitan areas in the U.S., the share of homes valued at least $1 million has increased year-over-year, according to Redfin. (RDFN)Austin, Indianapolis and Houston were the only major cities where the share of million-dollar homes declined.
California, on the other hand, has the largest share of $1 million homes: in both San Francisco and San Jose, about 80% of homes sell for seven-figure amounts.
The seven-figure starter house
Even entry-level homes (the bottom third of a region’s property values) are unaffordable for many first-time buyers.
A typical “starter home” costs 1 million USD or more in no less than 237 US cities, according to a recent report from the real estate site Zillow (ZG)That’s almost three times the number of cities where this was the case in 2019.
Nearly half of these cities are in California, where buyers in 117 cities would have to spend at least $1 million for a typical entry-level home. New York is in second place with 31 cities, followed by New Jersey with 21. Florida and Massachusetts each have 11 cities where an entry-level home has a seven-figure price tag.
The 13-digit real estate markets
There are now eight metropolitan regions worth one trillion US dollarsaccordingly Redfin Data published last week.
Over the past 12 months, the total value of American homes has increased by $3.1 trillion to a record $49.6 trillion. Over the past decade, that value has more than doubled, increasing by nearly 120 percent from June 2014, when it was worth $22.7 trillion.
Chen Zhao, head of economic research at Redfin, expects the total value of the housing market to exceed $50 trillion next year as a lack of supply continues to drive prices higher.
