$5 million is the new $1 million when it comes to buying a luxury home according to data released by Trulia on Wednesday. The report, which examined trends in luxury living found that in terms of all home values across 100 largest metros in the U.S., 4.3 percent homes are currently valued at $1 million or more.
The report indicated that in expensive cities like San Francisco listings priced at $5 million or more made up 3 percent of all listings. Long Island, New York, came in a close second with 2.2 percent listings priced at $5 million or more.
So why has $5 million become the new threshold for buying a luxury home? According to the report, the bar for owning a million-dollar home has dropped considerably over the years as these homes become more prevalent in the housing market.
Among the largest 100 metros surveyed for the report, homes valued at $1 million or more comprise 4.3 percent of all homes, a share that has gone up 3.8 times since 2002. For example, in San Francisco homes in the million-dollar plus range make up two-thirds of the housing market representing a share that has nearly tripled over the last five years. The share of these homes was 22.4 percent in 2012. In neighboring Oakland, California, the share of homes costing $1 million or more grew nearly five times from 5.1 percent in 2012 to 23.8 percent in 2017.
As a result of these rising prices, the report indicated, $5 million-plus homes are the new threshold for entry into luxury real estate. Over the past year, the share of $5 million plus homes increased 19.8 percent, or two percentage more than $1 million plus homes.
Despite the fact that the median home price of all listings in the last year was $282,900, 86 of the largest 100 metros had at least one listing priced at $5 million or more, the report said.
The view the complete report and methodology, click here.