$1M+ Homes Expected To Keep On Increasing

Mortgage News March 3, 2023

Despite sluggish market conditions and cooling price growth, home prices have not fallen significantly as of late. Home values over $1 million have more than doubled to a rate of one in twenty over the last few years.

In a new blog post of Today’s Homeowner with Denny Lipford authored by Stephanie Horan, she examines why the number of $1 million homes has increased and their expectations for the future by analyzing data and combining it with recent market trends.

Between 2015-2021, the number of million-dollar homes had more than doubled according to Horan’s findings after analyzing the data for 372 cities. More than any other city in the country, San Francisco, one of the top cities, had 73% of its homes valued over $1 million.

Furthermore, in 14 of the top cities, more than a third of homes within their bounds exceeded the million-dollar mark; in 17 cities, there is a greater than 10% difference between million-dollar homes and a household that can afford them. There is a large overlap between cities with millions of dollars worth of homes and the biggest affordability gaps.

According to Census data, there were approximately 2.0 million homes valued at more than $1 million in 2015. The number has increased to 4.2 million by 2021. During the same time period, the number of million-dollar homes in the U.S. increased from 2.7% to 5.0%.

At the state level, California and Hawaii have the most million-dollar homes. Over 23% of Californian homes are worth a million dollars or more, while more than 22% of Hawaii homes are worth a million dollars or more.

Are these homes affordable for everyone? Based on the research, to qualify for one of these homes, couples or singles would have to earn $200,000 or more with a 20% down payment and a mortgage not exceeding 30% of their monthly earnings.

However, most American households do not earn $200,000 a year to afford a million-dollar home. It is most evident in San Francisco, where housing is notoriously unaffordable. 73% of the homes in this city are worth $1 million or more, but only 42% of households earn at least $200,000 per year.

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