There are more million-dollar homes in the United States than ever before, following years of rising prices.
After a decade of ultra-low interest rates, slow housing construction and a lockdown-fueled “race for space,” home values have soared.
However, the recent higher mortgage rates over the past 18 months have not resulted in lower demand, as there are historically low numbers of properties available, pushing prices even higher.
So much so that now nearly 1 in 10 homes nationwide are worth $1 million or more.
The 7.6 percent year-over-year increase leaves the housing market with the highest share of million-dollar homes on record.
Luxury homes have seen an even faster increase in sales prices over the past year.
A luxury home for sale in Indianapolis, currently on the market for $1.2 million
It’s almost double the 4 percent market share before the pandemic, according to data collected by Redfin.
As of June 2024, there were about 8 million homes worth at least $1 million.
The median sales price of American homes is at a record high, having increased 4 percent in the last year alone.
But prices are rising even faster for the most expensive homes.
The median sales price for luxury homes rose 9 percent year-over-year to a record $1.18 million in June 2024.
This has pushed homes that were previously on the verge of a $1 million valuation over the edge, which largely explains the rise in prices for higher-end homes.
The number of homes valued at more than $1 million increased across the country except in three of the largest cities.
There was a drop in $1 million homes in Austin, Texas.
Austin experienced a boom in the Covid era as highly skilled workers sought to take advantage of the burgeoning tech industry.
Others, who couldn’t afford to live in states like California, were looking for better value for money.
The boom left 10.1 percent of homes priced at more than $1 million, a figure that fell to 10 percent in June.
The number of homes priced at $1 million or more remained steady in Indianapolis, accounting for 2 percent of the city’s overall market, and in Houston, 3.6 percent.
Texas has recently experienced a boom in new home construction, which has increased the supply of available properties and stopped prices from rising as quickly as elsewhere.
The number of homes on the market is about 30 percent lower than before the pandemic, as many homeowners with cheaper fixed-rate mortgages want to stay put and keep their lower rates.
Houston is one of the few cities that has not seen home costs rise by more than $1 million.
Meredith Whitney said mortgage rates need to reach 6 percent or less to revive the frozen market
The average 30-year fixed-rate mortgage fell to 6.47 percent this week, according to Freddie Mac figures as of Aug. 8.
“Home prices, insurance and mortgage rates have skyrocketed so much that many people are either priced out of the market or tired of committing to such a high monthly payment,” said Julia Zubiate of Redfin.
Mortgage rates have fallen to their lowest level in 15 months, but “Oracle of Wall Street” Meredith Whitney has said rates must fall below 6 percent before the market recovers.
Once rates are within the 5 percent range, buyers tend to feel encouraged that it is worth taking the plunge.
Whitney, who earned his nickname after predicting the global financial crisis, said home prices also need to fall by a tenth for there to be a material difference in affordability.
Mortgage rates at decades-high levels and record home prices mean the average home loan payment this year is double what it was in 2000, he said.
The average 30-year fixed-rate mortgage fell to 6.49 percent this week, according to Freddie Mac figures as of Aug. 15.
