‘Shrinkflation’ Hits Million-Dollar Homes

Sales of homes million dollar-plus homes have more than doubled over the past three years, but as with groceries, buyers are getting less than they used to, said Zillow, Seattle.

Million-dollar homes are getting smaller, Zillow said in Sales Up, Size Down for $1 Million Homes. Homes that sold at or near $1 million contracted nearly 500 square feet from a peak of 3,021 in mid-2020 to 2,530 in early 2022.

“Buyers with seven-figure budgets shopping for homes during the pandemic were doing so coming off the longest period of economic growth in U.S. history and with the help of historically low interest rates,” said Anushna Prakash, Economic Data Analyst with Zillow. “Sales for expensive homes soared while buyers in the heat of competition accepted smaller layouts.”

Zillow said the typical home in the $1 million range shrank in nearly every major metropolitan area. The largest declines were found in Phoenix–down 1,116 square feet from 2019 to 2022–and Nashville, where these homes lost 1,019 square feet. Floor plans grew in just two major metros: by a closet in Minneapolis (36 square feet) and by at least a room and a half in St. Louis (406).

Overall home sales were elevated during the pandemic but have slowed in recent months as affordability challenges pushed many buyers to the sidelines, Zillow reported. “The recent move of the market toward rebalancing has shifted competition away from mid- and high-tier properties and back to the most affordable homes,” the report said.

Sales for homes priced at $1 million or more rose from 43,421 in second-quarter 2019 to 90,110 in second-quarter 2022, a record volume. “These once-rare digs also constitute a much greater portion of the total market,” Zillow said, noting the share of single-family homes that sold for $1 million or more has more than doubled as home values skyrocketed across the country.

Homebuyers looking for the most bang for their million bucks should head to Hartford, Conn., then to the Midwest, Zillow noted. Among the 50 major metros included studied, Hartford had the lowest price per square foot at $205, followed closely by Indianapolis, Oklahoma City, Kansas City and Cincinnati.