The U.S. has 550 cities where $1 million homes are ‘typical’

There are a record number of areas in the United States where a “typical” home is worth $1 million or more.

As of February, the country had 550 “million dollar” cities, or areas where the “typical” value of a home is $1 million or more, according to a new analysis from Zillow. This represents a gain of 59 cities from 2023, and surpasses the previous record of 522 such cities when home values ​​peaked in 2022.

The rise of multimillion-dollar cities is the result of the mortgage lock-in effect, which has discouraged homeowners with extremely low rates from listing their properties for sale, said Skylar Olsen, chief economist at Zillow . This dynamic keeps supply limited in certain markets and drives up the sale prices of the few properties available.

California has the most million-dollar cities, with 210. That’s 12 more than a year ago and more than the next five states — New York, New Jersey, Florida, Massachusetts and Colorado — combined , Zillow discovered.

Even though there are more millionaire cities this year, the record amount is linked to how the lockdown effect affects a region’s supply, according to Olsen.

“The seller is as sensitive to the interest rate (as the buyer),” she said.

During this time, some areas have lost “million dollar” status. In places where many homeowners already enjoyed interest rates between 6 and 7 percent, the lock-in effect is not as strong.

These locations are seeing an increase in supply with more sellers ready to put homes on the market, Olsen said.

“In places where we’ve lost millions of dollars worth of cities… they’re not as locked in and there’s a lot more new construction that’s contributing to that picture as well,” she said.

Florida lost three million-dollar cities – Siesta Key, Santa Rosa Beach and Sanibel – while Texas lost Sunset Valley and Volente, two areas near Austin.

But it’s hard to tell if it’s a trend, Channel said. Both Florida and Texas are states that are still home to very expensive luxury markets, with $32 million and $14 million worth of cities, respectively, in February, according to Zillow data.

Naples, Florida also has the most expensive home for sale in the United States, going on the market in February for $295 million.