Sales of $1 million homes have more than doubled in the past three years, but buyers are getting a lot less than they used to, according to a report released Tuesday.
Dubbed “shrinkflation,” the size of the average $1 million dollar home has rapidly shrunk to 2,350 square feet in 2022, after peaking at 3,021 square feet in 2020, according to the report, released by Zillow. The average home now clocks in at 2,624 square feet after rebounding in July, 397 feet less than the 2020 peak.
“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,” Anushna Prakash, economic data analyst at Zillow said in a statement. “Sales for expensive homes soared while buyers in the heat of competition accepted smaller layouts.”
Every major metropolitan area has seen the typical $1 million home shrink in size since 2019, with Phoenix, Arizona, and Nashville, Tennessee seeing the most dramatic reductions in size, according to the study, with Phoenix seeing a decline of 1,116 feet and Nashville charting a decline of 1,019 feet.
Million-dollar floor plans grew in just two cities: by 36 feet in Minneapolis, Minnesota, and by 4o6 feet in St. Louis, Missouri between 2019 and 2022. The best value could be found in Hartford, Connecticut, which had the lowest price per square foot at $205 according to Zillow.
While they continue shrinking in size, sales for homes priced at $1 million or more rose from 43,421 in the second quarter of 2019 to 90,110 in 2022, as home prices get pushed higher amid inflation and a shortage of inventory.
Pricy homes also constitute a greater share of the market than ever before.
Homes priced in excess of $1 million made up 2.7 percent of single family home sales in 2019, 2.5 percent in 2020, and 6.4 percent in 2022, according to the report.
Portland, Oregon; Austin, Texas; and Riverside, California, have seen their share of million-dollar home sales grow the most over the three year period, Zillow found.