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‘Shrinkflation’s’ Impact on High-End Homes

The newest data from Zillow has revealed that the phenomenon known as “shrinkflation,” which most commonly occurs in consumer products, is occurring in the housing market as well as the size of $1 million plus homes has shrunk by an average of 491 square feet in the past three years. 

In the middle of 2020, the average square footage of a $1 million home was 3,021, but that number had shrunk to 2,530 by early 2022 according to internal floor plan data gathered by Zillow. 

"Buyers with seven-figure budgets shopping for homes during the pandemic were doing so coming off the longest period of economic growth in U.S. history and with the help of historically low interest rates," said Anushna Prakash, Economic Data Analyst at Zillow. "Sales for expensive homes soared while buyers in the heat of competition accepted smaller layouts." 

In nearly every metropolitan area monitored by Zillow, the typical million-dollar home shrunk in size. The largest declines are found in Phoenix—down 1,116 square feet from 2019 to 2022—and Nashville, where these homes lost 1,019 square feet. Floor plans grew in just two major metros: by a closet in Minneapolis (36 square feet), and by at least a room and a half in St. Louis (406). 

“Overall home sales were elevated during the pandemic, but have slowed in recent months as affordability challenges have pushed many buyers to the sidelines,” Prakash wrote. “The recent move of the market toward rebalancing has shifted competition away from mid- and high-tier properties, and back to the most affordable homes.” 

Sales for homes priced at $1 million or more rose from 43,421 in the second quarter of 2019 to 90,110 in 2022, a new record volume. These once-rare digs also constitute a much greater portion of the total market. As home values skyrocketed across the country, the share of single-family homes that sold for $1 million or more has more than doubled, moving from 2.7% in 2019 to 2.5% in 2020 to 6.4% now. 

Click here to view the report in its entirety, including breakdowns of metropolitan-level data. 

About Author: Kyle G. Horst

Kyle Horst
Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].
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