US Markets
Tuesday, April 9th, 2024 2:17 pm EDT
Key Points
- The U.S. experienced a record number of “million-dollar” cities in February, with 550 areas where the typical home value exceeds $1 million, marking an increase of 59 cities from the previous year.
- The surge in million-dollar cities is attributed to the mortgage lock-in effect, which discouraged homeowners with low-interest rates from listing their properties for sale, thereby limiting supply and increasing sale prices for available properties.
- While California leads with the most million-dollar cities, some areas have lost this status due to factors like lower interest rates, leading to increased supply and more homes being listed for sale. Notable examples include Siesta Key, Santa Rosa Beach, and Sanibel in Florida, as well as Sunset Valley and Volente in Texas. Despite fluctuations, both states still maintain high-cost luxury markets, with Naples, Florida, listing the most expensive home in the U.S. for $295 million in February.
In the United States, there has been a surge in the number of cities where the typical home is valued at $1 million or more, reaching a record high of 550 such cities in February, according to a recent analysis by Zillow. This marks an increase of 59 cities from the previous year and surpasses the previous peak of 522 million-dollar cities observed in 2022. Skylar Olsen, chief economist at Zillow, attributes this rise to the mortgage lock-in effect, which has dissuaded homeowners with exceptionally low interest rates from listing their properties for sale, thereby limiting supply and driving up sale prices for available properties. Interestingly, some areas historically known for catering to the affluent have seen an increase in million-dollar cities, with California leading the pack with 210 such cities, followed by New York, New Jersey, Florida, Massachusetts, and Colorado combined. However, while there is a rise in million-dollar cities, the record number is closely tied to the impact of the lock-in effect on supply dynamics. Olsen notes that sellers are just as sensitive to interest rates as buyers, influencing market conditions. Conversely, some areas have lost their million-dollar city status, particularly those where homeowners had higher interest rates, leading to increased supply as more sellers are willing to list their homes. For instance, Florida and Texas experienced a decline in million-dollar cities, with notable areas like Siesta Key and Naples losing their status. Nonetheless, it’s uncertain if this trend will continue, as both states still boast high-cost luxury markets. Despite fluctuations, the real estate market continues to see notable listings, such as Naples, Florida, where the most expensive home in the U.S., priced at $295 million, was listed in February.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/09/the-us-has-550-cities-where-million-dollar-homes-are-typical.html
