A record 8.5% of all homes in the United States are now worth at least $1 million, according to a new report on home prices.
The share of homes worth $1 million or more was 7.6% a year ago. It has also more than doubled from 4% in 2020, before the COVID-19 pandemic.
Median prices are also increasing in luxury homes, rising 9% year-over-year to a record $1.18 million in the second quarter of 2024.
The sharp increase in the number of million-dollar homes in the US is being attributed to the surging home prices, per a new Redfin report. As of June, the median home sale price was $442,451, up 4.0% year over year.
Mortgage rates are also pushing up home prices to record highs. In the week ending Aug. 15, the contract rate for the 30-year mortgage loan was 6.49% while the rate for the 15-year mortgage was 5.66%, Freddie Mac reported.
Furthermore, the tight supply of homes on the market puts pressure on demand, leading home prices to rise. Inventory has recently improved but is still 30% below pre-pandemic levels.
The high home prices are pricing out more prospective buyers out of the market, especially first-timers.
"Home prices, insurance and mortgage rates have shot up so much that many people are either priced out of the market or weary of committing to such a high monthly payment," Julie Zubiate, a Redfin Premier agent, said in a statement. "The people who are buying without hesitating are in tech and work at Google, Apple, Facebook or a similar company."
Where Are These Million Dollar Homes?
All but three of the country's 50 most populous metro areas saw a rise in the share of million-dollar homes. California had the most significant share of homes priced at $1 million or more. For instance, about 80% of all homes are worth at least $1 million in San Francisco and San Jose.
In addition, the share of million-dollar homes is rising faster in California than anywhere else in the country. The biggest increase was in Anaheim, where 58.8% of homes are now worth $1 million or more. That is up 51% from a year prior.
In contrast, the markets with the fewest million-dollar homes were Detroit, Cleveland, Pittsburg, and Kansas City. In these metro areas, less than 1% of homes were worth at least $1 million.