Where are all the million dollar homes? Spoiler alert: Wherever more people can afford them.
Few homeowners live in homes valued at a million dollars or more in the U.S., but in some cities, it’s more common than you think, according to a report from LendingTree.
Only 4.3 percent of owner-occupied homes in the country’s 50 largest metropolitan areas are valued at $1 million or more, according to the report, which analyzed census data.
Take a closer look, and it’s clear that million dollar plus homes are concentrated in a few places, with higher incomes and a greater concentration of well-off home buyers.
Metro areas in California nabbed the top four slots on the list: About 47.3 percent of owner-occupied homes in San Jose are valued at or above $1 million, compared with 36.3 percent of homes in San Francisco, 17 percent of homes in Los Angeles and 12.2 percent in San Diego.
The median price for an owner-occupied home in San Jose is $968,800; in San Francisco, it’s $840,600; and in Los Angeles, it’s $613,400.
Those cities are home to the entertainment and technology industries, among the biggest creators of wealth on the planet. Their executives are the ones who can afford high-priced homes, said Jacob Channel, research analyst at LendingTree.
The number of million dollar owner-occupied homes could be even higher post-pandemic, especially in big cities like New York, San Francisco and Los Angeles, Channel added.
“Because the housing market has been so wild lately, a lot of wealthier households in specific weren’t as negatively impacted by the pandemic, so they were able to take advantage of really low rates,” Channel said. That helped push up prices for the whole market.
The New York metro area — which factors in areas like Newark, New Jersey, and other surrounding cities — took the fifth spot on the list, with about 10 percent of owner-occupied homes valued at $1 million or more. There, the median price for an owner-occupied home is $450,900.
The Miami and Chicago metro areas took the ninth and 14th spots on the list. About 4.5 percent of owner-occupied homes in Miami meet or exceed that price point, compared with about 2 percent of owner-occupied homes in Chicago.
The median price for an owner-occupied home is $280,400 in Miami’s metro area and $239,600 in Chicago’s.
Channel said he was surprised that Denver made the top 10. About 3.5 percent of owner-occupied homes worth at least $1 million in its metro area, and its median price is $380,900.
“When you start looking into it, you realize that Denver is really rapidly growing and there’s a lot of wealth that’s being concentrated there which is causing its housing market to really heat up,” Channel said.
The lowest ranked metro areas include Buffalo, New York, with 0.5 percent of owner-occupied homes worth a million or more; Cleveland, Ohio, with 0.6 percent; and Pittsburgh, Pennsylvania, with 0.7 percent.
Those cities are part of the “Rust-Belt” region, northern cities once dominated by blue-collar workers in the manufacturing and steel industries. With many of those jobs now outsourced abroad, those who continue to work in those industries are likely to have lower incomes, hence less to spend on housing, Channel said.
“The cheaper places tend to be places where the economies aren’t quite as strong, you see a lot of Rust Belt cities which are still sort of struggling in the wake of the big automotive industry decline since the last recession in 2008,” Channel said.