‘Million-Dollar City’ Club Grows, But New Entrants Running Dry
Zillow, Seattle, said 11 cities are expected to join the “Million Dollar City” list in 2020—where the typical home value is at least $1 million—but five cities are likely to fall out, with few new entrants expected in coming years.
Zillow reported 218 Million-Dollar Cities in 2019, three more than at the end of 2018 and 74 more than there were five years ago. Seven new cities joined the list, but four saw home values decline below the $1 million threshold in 2019 as the market slowed, the first time since 2016 that any cities fell off the list.
The seven cities that earned the $1 million distinction during the course of 2019 were Santa Ynez, Calif.; Telluride, Colo.; Forest Hills, Tenn.; Sierra Madre, Calif.; McLean, Va.; Moose, Wyo.; and Redondo Beach, Calif. Dropping off the list were San Jose, Calif.; San Quentin, Calif.; Lexington Hills, Calif.; and Laie, Hawaii.
This is the first year since 2016 in which any cities fell off the $1 million list as home values declined in some expensive areas after a period of extreme price growth. An average of just under 20 cities a year broke the $1 million threshold from 2014-2018, including a high of 25 in 2017 when home values were appreciating near 7% annually.
“Odd though it may seem, it’s the cities at the top that are ‘struggling’ the most during this return to normalcy in the market,” said Skylar Olsen, Zillow director of economic research. “More than just slower growth, home values good and truly fell in many of these hubs of luxury, a sign that the excessive home value appreciation of the past several years drove prices too high–even beyond the reach of those who could afford almost anything almost anywhere else.”
Cities in the San Francisco, New York and Los Angeles metros dominate the list. More than half of all $1 million cities come from just these three metros–46 in San Francisco, 43 in New York and 30 in Los Angeles. Boston (10), San Jose (10) and Miami (7) have the next-most.
Zillow said if current rates of appreciation hold throughout 2020, 11 cities that just missed out in 2019 will join the $1 million club next year: Needham, Mass.; Edgartown, Mass.; Longport, N.J.; and East Pasadena, Glen Ellen, Alameda, View Park-Windsor Hills, Avila Beach, Clayton, Carmel Valley and Dana Point, all in California.
Five cities will lose their $1 million status in 2020, assuming their current rates of decline hold true. They are Kailua, Hawaii; Milpitas, Calif.; Harding Township, N.J.; Daly City, Calif; and Fremont, Calif.