The richest Americans are getting significantly richer and buying noticeably more homes. The share of million-dollar homes has skyrocketed in the past 15 years, while housing inventory at the low-end continues to suffer the most.
- The share of million-dollar has quadrupled since 2002
- Million-dollar homes are not considered luxury in some markets
- The top 0.1% of American earners saw their incomes surge 320% between 1980 and 2014
- San Francisco has the largest share (66%) of million-dollar homes
The housing market has shifted over the past 15 years to accommodate the top 0.1% of American earners – those with $6 million in average income. The share of million-dollar luxury homes more than quadrupled from 1% to 4.3% between 2002 and 2017. There are now 40 million-dollar homes for every person in the top 0.1% of Americans.
Real estate prices have risen so much in the past few years; a $1 million price tag does not even constitute luxury in markets like San Francisco. Luxury inventory is thriving, but its growth is amplifying the strain on overall housing inventory.
“The crunch is obviously happening at the starter segment. That’s where affordability hits the hardest,” said Cheryl Young, senior economist at Trulia. “As that share grows, the people it impacts is the people at the bottom.”
Here are the five metros with the most million-dollar homes:
- San Francisco: 66%
- San Jose, California: 56.4%
- Los Angeles: 23.8%
- Fairfield County, Connecticut: 17.7%
- Long Island, New York: 17.4%
The rapidly growing luxury market is not an anomaly, it is just catering to the flourishing wealth of America’s top earners. The rich got 320% richer between 1980 and 2014, and when was the last time you met a multi-millionaire with only one home.
America’s richest are making so much money, in fact, that there is a burgeoning market for homes worth $5 million or more – a segment Trulia describes as “the most luxurious homes available.” While these ultra-luxury homes are still only 0.28% of overall sales, their market share is five times higher than 2002.
“It was interesting to think about whether $5 million is becoming the new $1 million,” Young said.