HOUSTON – (By Dale King, Realty News Report) — The U.S. has lost 58 “million-dollar” cities — communities where the typical home is worth $1 million or more — since the housing market peaked last July, says a new Zillow analysis.
Compared to last summer’s highest price point, the typical U.S. home is now worth 4.1 percent less than it was last July, according to the Zillow Home Value Index. In current million-dollar cities, the typical home has, on average, lost 6.3 percent of its value during that time.
“The housing market is singing a much different tune than in recent years as it continues to rebalance toward normal,” says the report. “Last year set a record for the most new million-dollar cities amid supercharged housing demand.”
Zillow says both demand and supply hit the brakes in the second half of 2022 after mortgage rates spiked. Buyers, stretched thin in what they could afford, flocked to lower-priced homes, a reversal from earlier in the pandemic. With fewer buyers able to use the support of historically low interest rates to help afford homes with a higher price tag, expensive markets felt the biggest impact of the slowdown.
Thirty-two states are home to at least one million-dollar city, says Zillow. There were 33 states with one such city last summer, but Montana’s lone million-dollar municipality has since fallen off that list. Gallatin Gateway, a small community in the Bozeman area, has seen its typical home value fall to $987,824 — down about $117,000 since peaking in June.
Texas Loses Five Million-Dollar Cities
The Zillow analysis says the number of million-dollar cities in Texas dropped from 15 to 10. On the list of metros in Texas, Dallas-Fort Worth lost two million-dollar metropolitan areas, dropping from eight to six, and Austin saw three million-dollar metros say goodbye. The report contained no information on the Houston region.
Every state in the nation, says Zillow’s analysis, either lost a million-dollar city or kept the same number. Ditto for metros.
Coastal states continue to dominate the list. Of the 464 current million-dollar cities, 387 are in a state on either U.S. coast. California alone has 190 million-dollar cities, more than the next six states combined. There are 37 cities with a typical home value of more than $3 million, 36 of them in coastal states and one in Hawaii.
California has also lost 20 million-dollar cities since July, easily more than any other state. In addition to Texas, New Jersey also lost five million-dollar cities. Florida has lost four, and Utah and Hawaii have each lost three.
At the metro level, the New York City area has the most million-dollar cities, with 90. San Francisco (67 million-dollar cities), Los Angeles (53) and San Jose (21) are next, with Boston (19) holding enough strength to round out the top five, after tying with Seattle at this time last year.
Los Angeles has lost the most million-dollar cities since July, with seven falling below that mark. The New York City metro area has lost six, San Francisco has lost four.
Zillow says there are currently 464 U.S. cities where the typical home value is $1 million or more. There were 522 at the housing market’s peak last July.
“Unfortunately for buyers, mortgage rates have overwhelmed price cuts. But even though competition is picking up as we enter home shopping season this spring, it’s a much friendlier environment to buy a home for those who can make the finances work,” said Anushna Prakash, economic data analyst at Zillow.
“Sellers may have missed the market’s peak, but they can still get a higher price for their homes than last year in most markets, and certainly more than they would have before the pandemic. Getting the pricing right and boosting a home’s online curb appeal are keys to success for this spring’s sellers.”
March 18, 2023 Realty News Report Copyright 2023
Photo credit Ralph Bivins, Realty News Report Copyright 2023
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File: 58 Cities Drop Off
File: 58 Cities Drop Off
File: 58 Cities Drop Off Zillow