As Americans embrace record high prices from groceries to gas, buying a house has also become more expensive. An analysis by real estate brokerage company Redfin found a record number of homes in the U.S. are worth at least $1 million.
Redfin used its Housing Value Index model along with public records and real estate property listings, known as MLS, to estimate the current and historical value of more than 85 million properties across the country. The results found that nationwide, a record 8.2 percent of U.S. homes, about 6 million, were valued at $1 million or more in February.
That's up from 4.8 percent from two years earlier, before the coronavirus was declared a global pandemic.
California holds the biggest chunk of homes worth $1 million or more, with nearly nine out of 10 properties in both San Francisco and San Jose falling into the $1 million-plus category, according to Redfin. The biggest recorded increase in home values was seen in Anaheim, Calif. Where the share of homes worth at least $1 million nearly doubled to 55 percent.
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Redfin said it’s natural for homes to increase in value over time, and million-dollar homes end up taking up an increasingly large chunk of housing stock — but the pandemic caused prices to skyrocket in a matter of weeks.
That's because housing demand has far outpaced supply as Americans try to take advantage of record low mortgage rates and remote work.
Redfin’s analysis found that during the four weeks ending Feb. 27, the number of homes for sale dropped 50 percent from two years earlier to 456,000. That ended up fueling a 33 percent rise in the median U.S. home-sale price, which hit a record high of $363,975.
“The surge in housing values has turned many homeowners into millionaires but has pushed homeownership out of reach for a lot of other Americans. Incomes have increased, but not as fast as home prices, which means many people are stuck renting or have to move somewhere more affordable if they want to buy a home,” said Taylor Marr, deputy chief economist at Redfin.
California is not the only state experiencing a whirlwind housing market, Honolulu had a nearly 18-percentage-point increase in its share of homes worth at least $1 million in February. Seattle had a 21-percentage-point increase, while Austin, Texas, had an 8.4-percentage-point increase, having only 3.9 percent of its homes worth at least $1 million in February 2020 and jumping to 12.3 percent last month.
“Homes that were selling for $350,000 before the pandemic are going for closer to $500,000. My advice to buyers: If you see what seems like a reasonable price, buy it. The value will likely go up. If people wish they would have bought in Austin a year ago, next year they’re going to be wishing they would have bought now,” said Crystal Lopez, an Austin Redfin agent.
A separate analysis by online real estate marketplace Zillow predicted annual home value growth to continue to accelerate through the spring of 2022, peaking at 21.6 percent in May before gradually slowing to 17.3 percent by January 2023.
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