The number of cities where the typical home value was at least $1 million swelled to 312 localities in 2020, according to new data released by Zillow. Last year’s level was 45 cities higher than the level recorded in 2019, a 17% year-over-year increase and the largest net gain in at least a decade.
However, the spread of million-dollar cities was not evenly divided across the country. More than 70% of these pricey markets were concentrated in nine coastal metros, with 61 in the San Francisco metro area, 51 around the New York City metro area, and 39 in the Los Angeles area. Other major metros where typical home prices exceeded $1 million included the metro areas of San Jose (20 cities), Boston (11), Miami-Fort Lauderdale (11), Seattle (9), and Washington, D.C. (8).
Atherton, California, near San Francisco, recorded the highest typical home value in the country at about $6.6 million, with Hunts Point, Washington, near Seattle, ranking second with typical values around $6 million. Zillow attributed the dramatic rise in these expensive markets to shifting demographics and the socioeconomic impact of the coronavirus pandemic on the housing environment. Zillow also stressed that the million-dollar cities were not reflective of the wider housing market, where the typical value of a U.S. home is roughly $263,000.
"In 2020 home values soared nationwide because of incredible demand across all price tiers, which we expect to continue well into 2021," says Zillow Senior Economist Chris Glynn. "Despite the label, there are homes available in these communities for less than $1 million, but buyers must be realistic about their wish list and act quickly in the current market, especially since homes are selling in a matter of days in many places. For sellers, it is possible to capitalize on the recent growth in these markets and relocate to far less-expensive markets–particularly with an increase in remote work offering flexibility in the job market."
Separately, new data released by Redfin found the median home sale price increased 13% year-over-year to $319,000 during the four-week period ending January 3. Pending home sales were up 38% year-over-year while new listings of homes for sale were up 7%, the smallest annual increase since July.
For the week ending January 3, the seasonally adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other services from Redfin agents—was up 32% from pre-pandemic levels in January and February of 2020. For the week ending January 7, Redfin observed that 30-year mortgage rates tumbled to another new record low of 2.65%.
"The economy faces new challenges in the next few weeks, which are likely to see continued political instability and rising coronavirus cases," said Redfin Chief Economist Daryl Fairweather. "Still, it's unlikely that either will have a meaningful or long-term impact on homebuying demand, which, already extremely strong, is now bolstered by even lower mortgage rates. Migration and progressive economic policies will shape the housing market in the months to come. The recent migration of Americans to affordable places like Atlanta, Phoenix, and suburbs across the country has contributed to what will be a major change in fiscal and economic policy starting on January 20. While more government spending could lead to moderate mortgage-rate increases, it will also likely include programs to make homeownership affordable to more people."