Depending on where you live, your search for the “typical” home may run you at least $1 million.
And, according to Zillow, that list is growing — although the stream of new additions is running dry. At the end of this past December, the real estate data company reported there were 218 U.S. cities with a typical home value of at least $1 million, up from 215 in December 2018.
Seven new cities joined the list over the course of the past year: Santa Ynez, California; Telluride, Colorado; Forest Hills, Tennessee; Sierra Madre, California; McLean, Virginia; Moose, Wyoming; and Redondo Beach, California. On the other hand, four cities saw their average home values drop and left the list: the California cities of San Jose, San Quentin and Lexington Hills, along with Laie, Hawaii.
The net addition of three cities to the Zillow’s list is easily the lowest increase in recent years. Between 2014 and 2018, an average of 18 cities were added every year, with a peak of 25 additions in 2017 when annual home-price appreciation hovered around 7%. In fact, 2019 was the first year since 2016 that any cities fell off the list, as some expensive areas saw home values drop after a lengthy period of intense price growth.
“Odd though it may seem, it’s the cities at the top that are ‘struggling’ the most during this return to normalcy in the market,” said Skylar Olsen, Zillow’s director of economic research. “More than just slower growth, home values good and truly fell in many of these hubs of luxury, a sign that the excessive home value appreciation of the past several years drove prices too high — even beyond the reach of those who could afford almost anything almost anywhere else.”
Geographically, the list of so-called “million-dollar cities” is fairly clustered. Seventy-four percent of the list (161 cities) is concentrated within nine metro areas, all of which are on the coasts. Among those, 46 cities lie within the San Francisco metro area, while another 43 are clustered around New York City and 30 are the Los Angeles metro area. The metro areas of Boston (10 cities), San Jose (10 cities) and Miami (seven cities) also have multiple suburbs where the typical home price exceeds $1 million.
Although the growth of million-dollar cities has slowed, the list is expected to grow by six cities in 2020. If current rates of appreciation hold, 11 cities that barely missed out last year will join the list, while another five — assuming their current rates of price declines — will exit.