There are more $1 million homes in the US than ever before, after years of rising home prices.
After a decade of ultra-low interest rates, slow house building and the lockdown-induced “race for space”, house prices have soared.
However, recent increases in mortgage rates over the past 18 months have not led to lower demand, as there have been historically few homes available, which has only pushed prices higher.
So much so that almost 1 in 10 homes in the country is now worth $1 million or more.
The 7.6 percent year-over-year increase means the housing market now has the highest percentage of million-dollar homes ever.
Luxury home sales prices have risen even faster over the past year
A luxury home for sale in Indianapolis, currently listed for $1.2 million
It’s nearly double the 4 percent market share before the pandemic, according to data collected by Redfin.
As of June 2024, there were approximately 8 million homes worth at least $1 million.
The average sales price for American homes is at a record high, rising 4 percent in the past year alone.
But the prices of more expensive houses are rising even faster.
The average sales price of luxury homes rose 9 percent year-over-year to a record $1.18 million in June 2024.
This has caused homes that were once on the verge of a million dollars to go over the edge, which largely explains the rise in home prices.
The number of homes worth more than $1 million rose across the country, except in three of the largest cities.
In Austin, Texas, there was a decline in sales of homes valued at $1 million.
Austin experienced a Covid-era boom as highly educated workers sought to take advantage of the booming tech industry.
Others, unable to get out of states like California because of the low prices, looked for better value for money.
The boom meant that 10.1 percent of homes cost more than $1 million, up from just 10 percent in June.
The number of million-dollar homes or more remained flat in Indianapolis, accounting for 2 percent of the city’s total market. In Houston, it was 3.6 percent.
Texas has recently experienced a new housing boom, which has increased the supply of available properties and prevented prices from rising as quickly as elsewhere.
The number of homes on the market is down about 30 percent from pre-pandemic levels, as many homeowners with cheaper fixed-rate mortgages want to stay in their homes and keep their lower interest rates.
Houston is one of the few cities where home prices have not risen above $1 million
Meredith Whitney said mortgage rates need to be 6 percent or lower to revive frozen market
According to figures from Freddie Mac on August 8, the average 30-year fixed-rate mortgage rate fell to 6.47 percent this week
“Home prices, insurance rates and mortgage rates have risen so much that many people are either unable to afford to live in the market or are tired of making such high monthly payments,” said Redfin’s Julia Zubiate.
Mortgage rates have fallen to a 15-month low, but Meredith Whitney, the “Oracle of Wall Street,” says rates will need to fall below 6 percent before the market can recover.
Once interest rates are within 5 percent, buyers often feel encouraged and feel it is worth taking the plunge.
Whitney, who earned her nickname after predicting the global financial crisis, said house prices would also need to fall by a tenth to make a meaningful difference to affordability.
According to her, mortgage rates have been high for decades and house prices are at record highs, making the average mortgage payment this year twice as high as it was in 2000.
According to figures from Freddie Mac dated August 15, the average 30-year fixed-rate mortgage rate fell to 6.49 percent this week.