Pandemic Year Brings Huge Surge in ‘Million-Dollar Cities’
(Stock photo of San Francisco courtesy California Tourism Board.)
Move over, San Francisco Bay Area and New York City; you’ve got company—lots of it.
Despite the typical value of a home in the U.S. at $263,000, Zillow, Seattle, reported 312 U.S. cities with a typical home value of at least $1 million—45 more than a year ago. The one-year net gain, a 17% jump in “million-dollar cities,” is the largest net gain in at least a decade, and follows a decline in 2019.
The report said more than 70 percent of the million-dollar cities are concentrated in nine coastal metros, primarily San Francisco, New York and Los Angeles.
Just five years ago, there were just over 200 million-dollar cities. Zillow attributed the sharp increase to a “flaming hot market” last year that saw home values appreciating by nearly 7.5% annually in November as demographic trends and pandemic effects brought surging demand through most of 2020. This follows a year in which home prices appreciated at the lowest rate since 2013 and a net of two cities fell below the $1 million threshold.
“In 2020 home values soared nationwide because of incredible demand across all price tiers, which we expect to continue well into 2021,” said Zillow senior economist Chris Glynn. “Despite the label, there are homes available in these communities for less than $1 million, but buyers must be realistic about their wish list and act quickly in the current market, especially since homes are selling in a matter of days in many places.”
Million-dollar cities are fairly congregated geographically, with 70 percent concentrated within just nine coastal metro areas. Among those, 61 are in the San Francisco metro area; 51 are clustered around New York City; and 39 are in the Los Angeles area. The metro areas of San Jose (20 cities), Boston (11), Miami-Fort Lauderdale (11), Seattle (9) and Washington, D.C., (8) also have multiple cities where the typical home price exceeds $1 million.
Atherton, Calif., near San Francisco, has the highest typical home value in the country at $6.6 million. Hunts Point, Wash., near Seattle, is No. 2, with typical values at $6 million. Sagaponack, N.Y., and Jupiter Island, Fla. (Port St. Lucie metro area), follow with typical values above $5 million. Zillow reported six additional cities with typical home values above $4 million, 21 more with values above $3 million and another 38 with values above $2 million.
The Zillow analysis said historically, million-dollar cities are dominated by areas that offer natural amenities, such as proximity to ocean or mountains. Newcomers to the list include Potomac, Md.; Longport, Long Beach Township and Allenhurst in New Jersey; and Westhampton and the Town of Shelter Island in New York. Calistoga and Yountville in California’s Napa Valley also crossed the $1 million threshold in 2020, as well as Incline Village, Nev., in the Lake Tahoe area.
“An increased demand in places like Potomac and other more expensive areas around the county is happening because of the pandemic-driven need for more indoor and outdoor space, home offices, pools and more,” said Samer Kuraishi, a Best of Zillow Premier Agent and President of The ONE Street Company, a boutique real estate firm in Washington, D.C. “We’re seeing more buyers from afar using technology to tour homes and buy ‘sight unseen.’ The sellers who have a great media package, including a floor plan with dimensions, virtual staging and 3D imaging, have the edge in such a competitive market.”
Zillow said should current rates of appreciation hold, two additional coastal California cities could join the $1 million club in the coming months — El Cerrito and Cayucos.
