With the U.S. housing market still mired in a cooling period, the share of homes nationwide that are worth at least $1 million has declined, according to Redfin.
In June 2022, 8.6% of homes were worth $1 million or more — an all-time high. Since then, however, this share has slowly ebbed and dwindled to 7.1% in January, essentially flat on a year-over-year basis but still higher than the 4.2% share just prior to the start of the COVID-19 pandemic.
That’s according to the Redfin Housing Value Index, a proprietary model that incorporates public records, Multiple Listing Service data and Redfin estimates to approximate the values of more than 99 million properties nationwide.
Per Redfin, some of the decrease from June’s record high is seasonal, considering that home prices usually decrease during the fall and winter. But the latest June-to-January drop is much bigger than the historical norm and points to other factors at play.
With mortgage rates hovering near 6.5%, homebuyer demand continues to be uneven at best. This is pulling home prices south, meaning that a number of homes that would have fetched seven figures during the peak of the pandemic-era housing boom have dropped below the million-dollar threshold.
On a geographical basis, the share of homes valued at $1 million or more has fallen fastest in expensive coastal regions, with the Bay Area seeing the fastest contraction. Slightly more than 80% of homes are worth seven figures in San Francisco, the highest percentage among the 99 largest metro areas in the U.S. But this share has fallen rapidly and is down from 86.3% at the start of 2022.
Neighboring cities in the Bay Area have seen similar slides, including Oakland (44.8% in January, compared to 50% one year prior) and San Jose (79.2%, down from 81.7%). Other pricey coastal cities with similar decreases include Seattle (27.5%, down from 30.9%) and New York (29.5%, down from 32.5%).
The declining share of homes worth at least $1 million hasn’t been a bellwether for homebuyer relief at large, according to Redfin.
“Home values are coming down from their peak and fewer sellers could fetch seven figures, but that doesn’t mean buyers are getting a break,” said Chen Zhao, economics research lead at Redfin. “The typical homebuyer’s monthly mortgage payment is even higher than it was when home values peaked in the spring because rates are so much higher and although home prices have come down, they certainly haven’t crashed.
“Now isn’t the time for buyers who need to take out a loan to get a good deal. Buying an $800,000 home today would cost more per month than buying a million-dollar home a year ago.”