For Luxury Homes, $5 Million is the New $1 Million

Trulia, San Francisco, says if you want to get into the luxury home market, living in a $1 million home no longer cuts it: with more and more million-dollar homes swamping housing markets, $5 million is the new bar for luxury living.

In a follow-up report to its 2016 Million Dollar Creep study, Trulia reported in the nation’s 100 largest metros, 4.3 percent of homes (regardless of being listed on the market or not) are currently valued at $1 million or more–four times the number listed in 2002. And the number of $5 million-plus homes grew at an even faster rate, five times that of 2002.

In the past year, Trulia Senior Economist Cheryl Young said millions of single-family homes and condos were listed on the market across America’s 100 largest metros. Of all listings, more than 7,000–0.28%–listed for $5 million or more.

Since 2012 the share homes valued at $1 million or more grew three times in San Francisco and nearly five times in Oakland, Calif. comprising 66% and 23.8% of the housing market, respectively. In pricey places like San Francisco listings priced at $5 million or more made up 3% of all listings. Long Island, N.Y., home to the tony Hamptons, had the second highest share at 2.2%.

“Million-dollar homes are no longer the domain of exclusivity,” Young wrote. “As one would expect, high-end buyers seek homes that check off the best in terms of location, property size, leisure amenities and bespoke design features.”

Young said the bar for owning a million-dollar home has dropped considerably over the years as these homes have become more prevalent in the housing market. In San Francisco, for example, homes in the $1 million plus range make up a full two-thirds of the housing market representing a near tripling of the share (22.4% in 2012) over the past five years. Nearby Oakland, Calif., saw the share of million-dollar plus homes grow nearly five times, from 5.1% of all home values in 2012 to 23.8% in 2017.

“Five-million-dollar-plus homes now epitomize the new threshold for entry into luxury real estate,” Young said.

Despite the median home price of all listings in the last year was $282,900, 86 of the largest 100 metros had at least one listing priced at $5 million or more. At first glance what sets $5 million or more homes apart is that they have ample room to roam. Super luxury homes tend to have two more bedrooms, four more bathrooms and three times the square footage of those with lower price points. Across the 11 metros with at least 100 super luxury listings, the median bathroom count outnumbered bedrooms among high-end homes, which was never true for lower-end listings. These luxe properties also covered a lot more land, typically occupying at least four times the acreage of other listings.

“Penthouses on Park Avenue or beachside homes in Malibu, Calif. earn multi-million-dollar price tags because of their prime locations,” the report said. These luxe addresses are such because they lend themselves to waterfront access or spectacular skyline views. Trulia noted the greatest indicator of whether a listing was super luxury among the top 100 metros was the presence of breathtaking views. The rate at which “views” is mentioned was 87.8% of super luxury listings, or 6.6 times the rate among homes listed at less than $5 million.

Size also matters, Trulia said. Luxury homes in Los Angeles, for example are defined by expansive properties denoted by mentions of “estate” and “park-like” grounds. The terms “estate” and “grounds” appear at 15.9 and 8.0 more times among super luxury listings than other listings. Likewise, on Long Island it’s all about the acreage. The mention of “acres” occurs 5.4 times more in super luxury listing descriptions than in other listings, denoting the sheer size of these properties. In some places super luxury homes dwarfed their lower-end counterparts by a significant margin.

In Dallas, the median super luxury home is 4.5 times larger than other homes, measuring a sprawling 10,801 square feet compared to relatively modest 2,349 square feet for other homes listed in the area. In Ventura County, Calif., properties going for at least $5 million had a median lot size of 4.67 acres while all other listings occupied just 0.16 acres.