Zillow finds sharp increase in cities with $1M median home value

Dive Brief:

Online real estate marketplace company Zillow has released research indicating that the number of U.S. cities with a median home value of $1 million or more has doubled in the past five years and continues to rise sharply. Of the more than 10,000 U.S. cities analyzed, 197 now have median home values of at least $1 million, marking a 20% increase over last year's 164 cities. An additional 23 cities are expected to be on the list in the next year.
Nineteen states currently have at least one or more million-dollar home value cities, and Zillow expects the number to reach a new all-time high in the next 12 months. About 56% of the country's million-dollar home value cities are in California.
Silicon Valley-based city Atherton, CA has America's highest median home value, at $6.9 million, which is 31 times the median U.S value of $217,300.

Dive Insight:

Although Zillow points out that the number of U.S. cities with at least a $1 million median home value is small — less than 2% of all markets analyzed — the data indicate that the number of cities joining the list is experiencing rapid growth. It reflects nationwide concerns that the cost of housing is drastically outpacing worker wages and thus creating housing crises.

When looking at median data it's important to remember that the numbers are not averages, but instead the value directly in the middle. In cities with a median — or middle — home price of $1 million, half of the homes are equal to or more expensive than that number.

For the most part, the million-dollar home value cities are on the U.S. coasts, although Austin, Chicago, Denver, Dallas-Ft. Worth and Phoenix all had at least one city within their metro areas make the list. All of the cities anticipated to be added in the next 12 months are located in coastal states. Zillow's analysis noted that nationwide, the million-dollar markets "tend to be affluent and exclusive suburbs in communities adjacent to finance and tech hubs."

Of the 23 cities expected to be added within the next year, 14 are in California, of which nine are in the San Francisco Bay Area. This information, along with California cities currently constituting 56% of the list, is not exactly surprising considering that California cities regularly have been ranked as some of the most expensive places to live. The state is viewed as a hotbed of localized housing affordability crises, which are affecting the West Coast to a greater degree than the rest of the United States. In particular, the San Francisco-Silicon Valley area is considered a leader of the unaffordability pack.

Zillow predicted that home value growth would slow next year, but million-dollar home values still would increase about 11% based on its current analysis. Plus the number of cities where more than half the homes are valued at $1 million or more is expected to reach a new all time high. Although many cities are working on ways to solve their affordability woes, the solutions are not coming fast enough to make an immediately noticeable dent in housing costs, at least based on Zillow's data.