'Shrinkflation' hits $1 million homes, down 397 square feet since 2020

Rhea-AI Summary

Sales of homes priced at $1 million or more more than doubled since 2019, reaching a record 90,110 transactions in 2022. The pandemic fueled demand, driven by low interest rates and economic growth. However, median home sizes decreased nearly 500 square feet from their 2020 peak, impacting buyers in major markets like Phoenix and Nashville. Portland led the sales increase at 253%, while Boston saw a 32% decline. The average price per square foot varies greatly, with Hartford offering the most space for $1 million, averaging 4,873 square feet at $205 per square foot.

Positive

• Sales volume of $1 million-plus homes surged from 43,421 in Q2 2019 to 90,110 in 2022.
• The share of $1 million-plus home sales increased from 2.7% in 2019 to 6.4% in 2022.
• Portland saw a 253% increase in sales volume for homes priced at $1 million or more.

Negative

• Median home sizes declined from a peak of 3,021 square feet in 2020 to 2,624 square feet in 2022.
• The only metro area experiencing a decline in $1 million-plus home sales was Boston, with a 32% drop.

Market share of $1 million-plus homes more than doubled during the pandemic

• More than twice as many $1 million-plus homes were sold this spring than in the spring of 2019, with Portland, Austin and Riverside seeing the biggest jumps.
• The size of $1 million homes shrank the most in Phoenix and Nashville since 2019, but they expanded in St. Louis and Minneapolis.
• Hartford, Connecticut, is where $1 million goes the furthest, buying 4,873 square feet. 

SEATTLE, Aug. 30, 2022 /PRNewswire/ -- Sales of homes costing $1 million more than doubled over the past three years, but as with many products in the grocery store, buyers are getting less than they used to, according to a new analysis by Zillow®. 

Million-dollar homes are getting smaller. Homes that sold at or near $1 million contracted nearly 500 square feet, from a peak of 3,021 in the middle of 2020 to a valley of 2,530 in early 2022, according to floor plan data for Zillow listings. Home size bounced back before July and is now 2,624 square feet, down 397 square feet from the 2020 peak.

"Buyers with seven-figure budgets shopping for homes during the pandemic were doing so coming off the longest period of economic growth in U.S. history and with the help of historically low interest rates," said Anushna Prakash, economic data analyst at Zillow. "Sales for expensive homes soared while buyers in the heat of competition accepted smaller layouts." 

The typical home in the $1 million range shrank in nearly every major metropolitan area. The largest declines are found in Phoenix — down 1,116 square feet from 2019 to 2022  — and Nashville, where these homes lost 1,019 square feet. Floor plans grew in just two major metros: by a closet in Minneapolis (36 square feet), and by at least a room and a half in St. Louis (406). 

Overall home sales were elevated during the pandemic, but have slowed in recent months as affordability challenges have pushed many buyers to the sidelines. The recent move of the market toward rebalancing has shifted competition away from mid- and high-tier properties, and back to the most affordable homes.

Sales for homes priced at $1 million or more rose from 43,421 in the second quarter of 2019 to 90,110 in 2022, a new record volume. These once-rare digs also constitute a much greater portion of the total market. As home values skyrocketed across the country, the share of single-family homes that sold for $1 million or more has more than doubled, moving from 2.7% in 2019 to 2.5% in 2020 to 6.4% now. 

Portland led major metros in sales volume increase: The number of $1 million-plus sales soared by 253% since mid-2019. Austin, where home values are up 71% since mid-2019, saw sales jump by 220%. The only metro that witnessed a decline in the volume of transactions with a $1 million-plus price tag was Boston, where the share fell by 32%. Boston and other major East Coast metros had relatively low appreciation over the past three years compared to other regions. 

Portland, Austin and Riverside are where sales of $1 million-plus homes have risen the most since 2019. Sales rose the least in San Jose and San Francisco, and fell in Boston. 

One million dollars in San Jose will buy just three bedrooms, two bathrooms and just shy of 1,400 square feet of living space — about $715 per square foot, the highest amount among major metros. For context, a typical single-family home in San Jose was valued at over $1.5 million in July. Far from an exclusive membership, homes costing $1 million or more are the norm in the San Jose area, comprising 72% of the country's most expensive market.

Those looking for the most bang for their million bucks should head to Hartford, Connecticut, then to the Midwest. Among the 50 major metros included in the study, Hartford has the lowest price per square foot at $205, followed closely by Indianapolis, Oklahoma City, Kansas City and Cincinnati. Though options in that range are limited in these areas, it's hard to deny the opulence afforded by the expense, with square footage upward of 4,500.

Metropolitan Area*	Median Square Feet – $1 Million Home	Price Per Square Foot	Share of $1 Million- Plus Sales	Median Age in Years – $1 Million Home	Median Number of Bedrooms – $1 Million Home	Median Number of  Bathrooms – $1 Million Home
United States	2,624	$381	6.4 %	31	4	3
New York, NY	2,500	$400	9.4 %	60	4	3
Los Angeles–Long Beach–Anaheim, CA	1,644	$608	39.6 %	59	3	2
Chicago, IL	3,375	$296	3.8 %	27	4	3.5
Dallas–Fort Worth, TX	3,818	$262	5.1 %	16	4	4
Philadelphia, PA	3,510	$285	2.7 %	26	4	3.5
Houston, TX	3,831	$261	3.7 %	18	4	3.5
Washington, DC	2,572	$389	12.6 %	35	4	3.5
Miami–Fort Lauderdale, FL	2,617	$382	8.4 %	33	4	3
Atlanta, GA	4,130	$242	3.5 %	24	5	4.5
Boston, MA	2,745	$364	9.3 %	39	4	2.5
San Francisco, CA	1,636	$611	62.0 %	54	3	2
Detroit, MI	3,700	$270	1.2 %	25	4	4
Riverside, CA	2,820	$355	7.6 %	23	4	3
Phoenix, AZ	2,933	$341	6.9 %	23	4	3
Seattle, WA	2,160	$463	27.1 %	36	3	2
Minneapolis–St. Paul, MN	3,797	$263	3.4 %	25.5	4	2.5
San Diego, CA	1,835	$545	32.1 %	43	3	2.5
St. Louis, MO	4,108	$243	1.5 %	50	4	3.5
Tampa, FL	2,690	$372	3.6 %	30.5	4	3
Baltimore, MD	3,550	$282	2.8 %	23	4	4
Denver, CO	3,083	$324	11.7 %	28	4	2.5
Portland, OR	2,886	$347	8.3 %	27	4	3
Charlotte, NC	3,790	$264	4.3 %	19	4	3.5
Sacramento, CA	2,641	$379	9.9 %	27	4	3
San Antonio, TX	3,830	$261	2.2 %	16.5	4	3.5
Orlando, FL	3,671	$272	3.5 %	17	5	4
Cincinnati, OH	4,514	$222	1.1 %	27	4	4.5
Kansas City, MO	4,529	$221	2.0 %	16	5	4.5
Las Vegas, NV	3,339	$299	3.8 %	19	4	3
Columbus, OH	3,467	$288	1.2 %	22	4	4
Indianapolis, IN	4,788	$209	1.2 %	18	5	4.5
San Jose, CA	1,399	$715	71.6 %	49	3	2
Austin, TX	2,930	$341	11.2 %	16	4	3
Virginia Beach, VA	3,500	$286	1.6 %	21	4	4
Nashville, TN	3,181	$314	9.0 %	17	4	3.5
Providence, RI	2,944	$340	5.0 %	62	4	2.5
Jacksonville, FL	2,898	$345	3.4 %	19	4	3.5
Oklahoma City, OK	4,677	$214	1.3 %	17.5	4.5	4.5
Hartford, CT	4,873	$205	1.6 %	23	4	4.25
Richmond, VA	2,967	$337	2.7 %	37	4	3
Raleigh, NC	3,772	$265	4.6 %	15	4	4
Salt Lake City, UT	3,561	$281	5.9 %	37	5	2.5

*Table ordered by market size 

 

Methodology

One million-dollar homes are defined as single-family homes that sold for between $950,000 and $1,050,000. Condominiums are excluded to better control for composition of homes across markets. One million-dollar-plus homes are defined as single-family homes that sold for $1,000,000 or more.

Additionally, metropolitan areas that had fewer than 30 sales of $1 million homes in a quarter are excluded from the analysis, due to limited observations from which to draw trends.

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease. 

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Trulia®, Out East®, ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

 

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/shrinkflation-hits-1-million-homes-down-397-square-feet-since-2020-301614339.html

SOURCE Zillow

FAQ

What is the sales trend for $1 million homes in 2022?

Sales of homes priced at $1 million or more have more than doubled since 2019, reaching a record volume of 90,110 transactions.

Which cities saw the highest increase in $1 million home sales?

Portland, Austin, and Riverside experienced the largest sales increases for $1 million-plus homes since 2019.

How much have $1 million homes decreased in size?

Since 2020, the median size of $1 million homes has decreased nearly 500 square feet, from 3,021 to 2,624 square feet.

What is the average price per square foot for $1 million homes in Hartford?

In Hartford, the average price per square foot for $1 million homes is $205, providing the most space at 4,873 square feet.

What portion of homes sold are priced at $1 million or more?

The proportion of single-family homes sold for $1 million or more has increased from 2.7% in 2019 to 6.4% in 2022.