The US has a record-high 550 'million-dollar' cities

Rhea-AI Summary

Zillow analysis reveals a record-high 550 'million-dollar' cities in the U.S. as home values rise due to low inventory. California leads with 210 such cities, followed by New York and New Jersey. Affordability challenges persist, but new listings are increasing, potentially driving prices higher.

Insights

Real Estate Market Analyst

The surge in million-dollar cities across the U.S. reflects a persistent supply-demand imbalance in the housing market. With inventory remaining low, competition among buyers is intense, leading to sustained price appreciation, even amidst affordability challenges. This trend is particularly pronounced in states like California and New Jersey, which have seen significant year-over-year increases in the number of million-dollar cities.

From an investment perspective, this data indicates a robust market for luxury properties and suggests potential growth areas for real estate developers and investors. However, the net loss of million-dollar cities in Florida, Texas and Delaware signals a possible market correction or a shift in buyer preferences, possibly due to economic factors or saturation of high-end properties in those states.

Long-term implications for the real estate market may include a widening gap between the luxury and standard housing markets, with potential spillover effects on local economies, such as increased property taxes and cost of living. This could influence the attractiveness of these areas to new residents and businesses, potentially impacting local job markets and economies.

Economic Analyst

The increase in the number of million-dollar cities is a microcosm of the broader economic trends affecting the U.S. housing market. The data suggests a concentration of wealth and an upmarket shift in certain geographic areas. The economic impact includes potential changes to consumer spending patterns, as homeowners in these million-dollar cities may have different financial behaviors compared to those in less affluent areas.

The regional differences in the growth and decline of million-dollar cities could be indicative of broader economic shifts, such as the movement of high-income individuals and the jobs that attract them. The decline in certain states could reflect local economic issues or tax policies influencing real estate values. Additionally, the potential for lower mortgage rates could stimulate further price growth, which would have implications for housing affordability and the overall economy.

It's important to consider the potential for a market correction if the economic environment changes, such as through interest rate hikes or a slowdown in job growth. This could lead to a decrease in home values, particularly in markets that have experienced rapid price appreciation.

Housing Policy Expert

The dynamics of the housing market, as reflected by the increase in million-dollar cities, raise important considerations for housing policy. The current environment underscores the need for policies that address housing affordability and inventory shortages. While the rise in new listings suggests an easing of the 'rate lock' effect, it remains to be seen whether this will translate into more accessible pricing for the average buyer.

Policy measures could include incentives for new construction, particularly of affordable housing and revisions to zoning laws to allow for higher-density developments. The geographic distribution of million-dollar cities also highlights the need for regional approaches to housing policy, as the challenges and solutions may differ significantly between states like California and New York versus Florida and Texas.

Additionally, the implications for infrastructure and public services in these high-value areas must be considered, as increased property values could strain existing resources or necessitate new public investments to support growing populations and maintain quality of life.

Low inventory is keeping competition high and home values rising

• There are currently 550 U.S. cities where the typical home value is $1 million or more, up from 491 a year ago.
• California easily boasts the most million-dollar cities, followed by New York and New Jersey.
• Florida, Texas and Delaware are the only states with a net loss in million-dollar cities over the past year.

SEATTLE, April 2, 2024 /PRNewswire/ -- The U.S. has a record-high 550 "million-dollar" cities — cities where the typical home is worth $1 million or more — a new Zillow® analysis shows. That is 59 more million-dollar cities than a year ago,¹ reversing losses from when home values were wobbling this time last year.

A tight housing market with few homes available has kept home values rising, even while affordability challenges have hampered buyers. The good news for buyers in the market this home-shopping season is that new listings are on the rise as the effects of "rate lock" — occurring when homeowners are financially incentivized to keep their current home because of the low rate on their current mortgage — are weakening, and the hope for lower mortgage rates later this year may mean a second wave of buyer demand this summer.

"Affordability is still a big challenge for buyers, but that hasn't stopped prices from growing," said Anushna Prakash, an economic research data scientist at Zillow. "Buyers this spring are going to see more options to choose from, but they'll also see a lot of other buyers wandering through the same open houses. Competition will stay fierce, especially for the most attractive and well-priced homes. If mortgage rates drop later this year, as many expect, we may see a surge in million-dollar cities as even more buyers jump in and drive prices higher."

While million-dollar cities were affected more than the typical U.S. city when home values fell in late 2022, they have generally tracked with the national market over the past year. The typical U.S. home is worth 4.2% more than it was a year ago. In current million-dollar cities, the median year-over-year home value growth is 4.6%.

California is home to 210 million-dollar cities, more than the next five states combined. New Jersey has added the most million-dollar cities over the past year, gaining 14.

Florida, Texas and Delaware are the only states to have a net loss in million-dollar cities over the past year. Florida lost three million-dollar cities — Siesta Key, Santa Rosa Beach and Sanibel — while adding one, the Village of Palmetto Bay, near Miami. Texas lost two million-dollar cities in the Austin area, Sunset Valley and Volente, and added Bellaire, outside of Houston. The typical home in Delaware's Dewey Beach fell below the million-dollar cutoff.

The New York City metro area, which includes parts of New Jersey and Pennsylvania, has the most million-dollar cities with 106 — 24 more than a year ago. San Francisco is next with 69, followed by Los Angeles with 63. Other than the New York City metro area, Los Angeles gained the most million-dollar cities over the past year, adding seven. Boston added four during that time, and San Diego, Chicago and San Luis Obispo each added three.

Whether a buyer or renter is searching for a home in a million-dollar city or somewhere with home values closer to average, Zillow has tools that can help.

An affordability calculator can help a buyer better understand what they can afford and set a budget. Buyers can then use Zillow to search for homes filtered for a monthly cost they are comfortable with, instead of only by list price. Buyers can also find and connect with a knowledgeable real estate professional and loan officer on Zillow to help guide them through the home-buying process.

Million-Dollar Cities by State
State	$1 Million Cities – February 2024	$1 Million Cities – February 2023
California	210	198
New York	66	54
New Jersey	49	35
Florida	32	34
Massachusetts	31	27
Colorado	21	21
Washington	18	16
Hawaii	17	16
Texas	14	15
Maryland	10	8
Virginia	7	5
South Carolina	6	6
Connecticut	6	5
Minnesota, Utah	6	4
Illinois	6	3
Missouri	5	5
Nevada, North Carolina, Wyoming	4	4
Montana	4	3
Arizona	4	2
Idaho, Tennessee	3	3
New Hampshire	3	2
Ohio	2	2
Pennsylvania	2	0
Delaware	1	2
Georgia, Kansas, Maine, Michigan, Rhode Island, Wisconsin	1	1

 

Metro Areas With the Most Million-Dollar Cities
Metro Area	$1 Million Cities – February 2024	$1 Million Cities – February 2023
New York, NY	106	82
San Francisco, CA	69	69
Los Angeles, CA	63	56
Boston, MA	23	19
San Jose, CA	18	18
Seattle, WA	17	15
Miami–Fort Lauderdale, FL	17	16
Washington, DC	14	12
San Diego, CA	10	7
Santa Maria–Santa Barbara, CA; Santa Rosa, CA	9	9

About Zillow Group:

Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing and renting experiences.

Zillow Group's affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and Follow Up Boss®.

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.

¹ February 2023 Zillow Home Value Index (ZHVI) figures are unavailable for 11 cities with ZHVI above $1 million for February 2024.

 

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SOURCE Zillow

FAQ

How many 'million-dollar' cities are there in the U.S. according to the Zillow analysis?

There are currently 550 'million-dollar' cities in the U.S., as per the Zillow analysis.

Which state has the most 'million-dollar' cities?

California has the most 'million-dollar' cities, with 210 cities falling in this category.

Which states experienced a net loss in 'million-dollar' cities over the past year?

Florida, Texas, and Delaware are the states that had a net loss in 'million-dollar' cities over the past year.

How much has the typical U.S. home value grown year-over-year?

The typical U.S. home value has grown by 4.2% year-over-year.

Which state added the most 'million-dollar' cities in the past year?

New Jersey added the most 'million-dollar' cities in the past year, gaining 14 cities.