Million-Dollar Neighborhood Club Growing; ‘Unlikely’ Markets Heating Up

More than three million U.S. homes are currently worth $1 million or more, representing 3.6 percent of all homes nationwide. And as that number has grown, said Trulia, San Francisco, so too has the number of million-dollar neighborhoods.

A separate report from Redfin, Seattle, said while expensive coastal markets such as Seattle and San Jose are cooling off, some smaller, affordable–and unlikely–inland metro areas are heating up, such as Akron, Ohio; Richmond, Va., and Buffalo.

The Trulia analysis (, Felipe Chacón, housing economist with Trulia’s Housing Economics Research Team, said the number of million-dollar U.S. homes has more than doubled since 2012.

“Million-dollar homes remain relatively rare, but widespread and robust home value growth–the typical U.S. home appreciated 7.6 percent over the past year, with many markets experiencing double-digit growth–is helping to quickly swell the ranks,” Chacón said.

The analysis shows increases in the share of million-dollar homes are largely concentrated in pricey coastal areas and in neighborhoods that have experienced rapid price appreciation. The San Francisco Bay Area and other West Coast metros–areas that already feature high home values and rapid price appreciation, topped the list of places with the biggest jump in the share of $1 million homes. Long Island, N.Y., is the only metro not on the Pacific coast to crack the list of top-10 places with the largest increase.

“It’s clear the Golden State more than lives up to its moniker,” Chacón said. “And given that so many homes there are worth $1 million-or-more, it should come as little surprise that California is also home to the largest number of million-dollar neighborhoods–those enclaves where half of all homes are worth at least a cool million bucks.”

Of the more than 15,100 larger neighborhoods nationwide included in the Trulia analysis, 838 had a median home value of $1 million or more, two-thirds of which are in California. More than a quarter (29 percent) of California’s neighborhoods have a median home value of at least $1 million. New York, Florida and Washington rank follow, distantly, but the top four states represent 83 percent of all million-dollar neighborhoods. Colorado ranks fifth-most with $1 million neighborhoods (27), most of which are in the Boulder area.

Trulia said of those 838 million-dollar neighborhoods, 105 crossed the threshold in the past year alone. In San Francisco, seven neighborhoods were added over the past year to the 80 that had already surpassed the million-dollar mark. In the entire city, only 15 neighborhoods remain where the median home is worth less than $1 million.

The analysis found among the 100 largest metro areas, three got their first million-dollar neighborhood in the past of year. In Austin, the median home value in Barton Creek increased to $1.02 million in October, up from $935,000 a year ago. The median home value in Indianapolis’ Crows Nest area jumped 9.1 percent over the past 12 months to $1.07 million, up from $977,000 the year before. In Newport, R.I., south of Providence, the median home value in Lily-Almy Pond increased to $1.15 million, from $843,300 the previous year.

Meanwhile, Redfin, Seattle, said its analysis of 25 metro areas with populations of at least 500,000 people also reported Wilmington, Del.; Philadelphia; and Atlanta lead areas where supply is shrinking, leaving more homes to go under contract within days and for above-list price than a year ago.

By contrast, previously red-hot markets such as Seattle, San Jose and Portland have in recent months seen double digit percentage increases in inventory, resulting in the shares of homes going under contract quickly shrinking.

Redfin said homes in heating metro areas are also considerably less expensive than not only hot coastal markets, but also than the national median price of $300,000. Plus, except for Atlanta and Philadelphia, all of the heating-up metro areas are smaller, with populations under two million. Atlanta is also a top migration destination, moving up from #5 among long-distance user searches a year ago to #2 in the third quarter.

Claryssa McEnany, a Redfin agent in Wilmington, said the heating has its drawbacks. “Too many sellers are staying put,” she said. “Buyers are motivated and want to move now but there just aren’t enough homes available.”

McEnany said competition in Wilmington has become “fierce” and often buyers have to offer over asking priceand compete against three to six other offers. “I’m working with several buyers moving to the area from New Jersey who have expressed that they want to escape the higher property taxes that they can no longer fully deduct.”

Redfin said it’s likely that even if the real estate slowdown becomes more widespread, these inexpensive markets will continue to show strength “thanks to their big advantage in affordability.”