The number of “million-dollar cities” in the U.S. surged 17 percent year over year during a period of pandemic-fueled buying, leading to the greatest net gain in such cities in at least a decade, according to Zillow.
Zillow’s analysis, which was released on Monday, revealed that there are now 45 more cities in the U.S. with a typical home value of at least $1 million than there were at the end of 2019, bringing the total in 2020 to 312. In contrast, 2019 actually saw a net loss of the number of million-dollar cities. That year, home values appreciated at their lowest annual rate since 2013.
Zillow determines “typical home value” based on the Zillow Home Value Index estimate for any given region, which is a weighted average of the middle third of homes in that region.
As buyers scrambled to find new homes to fit their new needs during an unprecedented year, home values continued to climb nationally, hitting an annual increase of 7.5 percent as of November 2020.
“In 2020 home values soared nationwide because of incredible demand across all price tiers, which we expect to continue well into 2021,” Zillow Senior Economist Chris Glynn said in the analysis. “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. For sellers, it is possible to capitalize on the recent growth in these markets and relocate to far less expensive markets — particularly with an increase in remote work offering flexibility in the job market.”
About 70 percent of million-dollar cities are concentrated in the same nine coastal metro areas, including the San Francisco metropolitan area, comprised of 61 million-dollar cities; the New York City metropolitan area, with 51 million-dollar cities; the Los Angeles metropolitan area, with 39 million-dollar cities; the San Jose metropolitan area, with 20 million-dollar cities; the Boston metropolitan area, with 11 million-dollar cities; and the Miami-Fort Lauderdale metropolitan area, also with 11 million-dollar cities.
The city that currently holds the highest typical home value in the country is Atherton, California (near San Francisco) with typical home values sitting at about $6.6 million. After that, Sagaponack, New York, and Jupiter Island, Florida (Port St. Lucie metro area) with typical home values over $5 million.
Zillow’s million-dollar cities list has typically been full of cities close to natural escapes like the ocean or mountains, and many newcomer cities from 2020 also fall into these categories like Potomac, Maryland; Long Beach Township, New Jersey; Shelter Island, New York; and Incline Village, Nevada.
“An increased demand in places like Potomac and other more expensive areas around the country is happening because of the pandemic-driven need for more indoor and outdoor space, home offices, pools and more,” Samer Kuraishi, president of The One Street Company in Washington, D.C., noted in Zillow’s report.