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Americans Getting Priced Out as Home Prices Soar

A record 8.2% of U.S. homes were valued at $1 million or more in February, according to a new report from Redfin—up 4.8% from 2020 before the coronavirus was declared a pandemic. The Bay Area leads with nearly nine out of 10 properties in both San Francisco and San Jose falling into the $1 million-plus category, although the biggest increase was in Anaheim, CA, where the share of homes worth at least $1 million nearly doubled to 55%.

Home values naturally increase over time, making sense that million-dollar homes are taking up an increasingly large portion of the housing stock. Prices have skyrocketed because housing demand has far outpaced supply as Americans have moved to take advantage of historically low mortgage rates and remote work.

During the four weeks ending Feb. 27, the number of homes for sale plummeted 50% from 2020 to an all-time low of 456,000. That helped fuel a 33% rise in the median U.S. home-sale price, which hit a record high of $363,975.

“The surge in housing values has turned many homeowners into millionaires, but has pushed homeownership out of reach for a lot of other Americans,” said Redfin Deputy Chief Economist Taylor Marr. “Incomes have increased, but not as fast as home prices, which means many people are stuck renting or have to move somewhere more affordable if they want to buy a home.”

The Bay Area has been the most expensive place to buy a home in the U.S., becoming even less affordable throughout the pandemic. The median sale price in both San Francisco and San Jose was an estimated $1.4 million as of January, up 5% and 13% year-over-year. While prices in San Francisco have climbed at a slower rate than the rest of country, the area continued to see price gains despite a mass departure of residents.

The top 10 metros with homes worth at least $1 million are:

  1. San Francisco (88.7%)
  2. San Jose (85.9%)
  3. Anaheim (55.3%)
  4. Oakland (55.1%)
  5. San Diego (40.4%)
  6. Los Angeles (38.5%)
  7. Honolulu, HI (37.1%)
  8. Seattle, WA (36.5%)
  9. New York, NY (32.1%)
  10. Oxnard, CA (31.2%)

In Anaheim, CA, approximately 55.3% of homes were worth at least $1 million in February, up 27.2% from 2020. That 28-percentage-point increase shows a bigger jump than any other metro Redfin analyzed—followed by San Diego, CA, Seattle, WA, Oakland, CA and San Jose, CA. Anaheim has dealt with an especially severe housing shortage, which has also contributed to the surge in prices. The number of homes for sale in the metro plummeted 42.5% year-over-year in January. It was also the third most competitive metro based on the share of homes selling above their list price at 62.6%.

“House hunters in Anaheim are regularly competing with dozens of other people. In the past month, I helped one buyer compete against 42 bidders and another compete against 26. Low mortgage rates and a lack of inventory are the main factors driving the surge in bidding wars and prices,” said local Redfin real estate agent Linda Tessitore. “This week, one of my buyers offered $1.57 million for a Costa Mesa home listed at $1.5 million. The seller came back and said they’d need to offer at least $1.75 million to compete. My client opted to look elsewhere because they couldn’t afford to go $200,000 over their budget for an 1,100 square-foot home. I’m starting to see buyers widen their searches to cities like Corona, Temecula and Riverside.”

To read the full report, including charts, most popular metro breakouts, and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].
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