The U.S. housing market is still going through a cooling period and as a result, the percentage of homes that are valued at $1 million or more has declined, according to Redfin. In January 2023, 7.1% of homes were worth $1 million or more, which is a decrease from June 2022’s all-time high of 8.6%. However, it is still higher than the 4.2% share before the pandemic began.
Redfin’s proprietary model, the Housing Value Index, uses public records, Multiple Listing Service data, and Redfin estimates to approximate the value of over 99 million properties across the country. The decrease from June’s record high is partly due to seasonal changes, as home prices typically fall during the fall and winter. However, the drop from June to January is much bigger than usual, indicating that other factors are also at play.
The uneven demand from homebuyers, as mortgage rates hover around 6.5%, is causing home prices to decline. Consequently, some homes that would have previously sold for seven figures during the peak of the pandemic housing boom are now priced below the million-dollar mark.
Coastal regions with high property values have seen the sharpest decrease in the share of homes worth $1 million or more, with the Bay Area experiencing the fastest contraction. Over 80% of homes in San Francisco are worth seven figures, the highest percentage among the 99 largest metro areas in the U.S. However, this percentage has fallen rapidly, dropping from 86.3% at the start of 2022. Neighboring cities in the Bay Area have also seen similar decreases, including Oakland and San Jose.
Other expensive coastal cities with similar decreases include Seattle and New York. However, Redfin notes that the decline in the share of homes worth $1 million or more does not necessarily indicate homebuyer relief overall.