The U.S. housing market has seen a tremendous boom over the past several years, with demand far outstripping supply in terms of the number of homes on the market. And despite recent high interest rates and inflation, home prices have not fallen.
In fact, a growing number of homes in the U.S. are surpassing the million-dollar mark. Over the past several years, the number of million-dollar homes has more than doubled. And with that, recent Census Bureau data shows that more than one in 20 homes is worth $1 million or more.
With the number of million-dollar homes increasing significantly, Today’s Homeowner takes a closer look at the high-end housing market in the U.S.
With the number of million-dollar homes increasing significantly, Today’s Homeowner takes a closer look at the high-end housing market in the U.S.
See our Methodology section for more information on how we collected and analyzed the data.
main findings
- The number of million-dollar homes across the country has more than doubled from 2015 to 2021.
- 73% of homes in San Francisco are priced at over $1 million, more than any other city in the country.
- At least one-third of homes in 14 cities are worth $1 million or more.
- In 17 cities, the gap between the share of homes worth million dollars and the share of households able to afford them is more than 10%.
- The cities are similar, with the largest increase in the number of million-dollar homes and the largest gap in affordability.
The growing number of million-dollar homes
Census data shows that in 2021, there are about 4.2 million homes in the U.S. valued at $1 million or more. This figure has risen steadily over the past several years. In 2015, it was at about 2.0 million homes.
The proportion of million-dollar homes in the US has also nearly doubled, from 2.7% in 2015 to 5.0% in 2021.
In 14 cities, the proportion rose by more than 20 percent. Many of these metropolises are concentrated in the Pacific Northwest, including San Francisco, Seattle and surrounding cities.
In addition to California and Washington, Boulder in Colorado also makes it to the list. The percentage of million-dollar homes in Boulder was 14.4% in 2015, but increased to 44.4% in 2021 – a difference of 30 percentage points. The table below shows the top 50 cities where the number of million-dollar homes is growing the most.
Where are the most million dollar homes?
At the state level, million dollar homes are most prevalent in California and Hawaii. In California, more than 23% of homes are worth a million dollars or more; in Hawaii, the share of million dollar homes is more than 22%.
Many of the cities with the highest share of million-dollar homes are also concentrated in California. In keeping with the growth discussed earlier, three California cities (Pleasanton, Sunnyvale, and San Francisco) have a percentage of million-dollar homes greater than 70%.
In four other cities, more than half of homes are worth $1 million or more. These include Fremont, San Jose and Carlsbad in California, as well as Bellevue, Washington. While about 60% of homes in Bellevue are million-dollar homes, in its western neighbor Seattle, the figure is about 33%.
Who can afford a million dollar house?
The range to buy a million dollar home depends on the individual’s financial circumstances. For example, an individual or couple may have a high annual income but a small amount saved for a down payment. Conversely, an individual may have a large amount for a down payment but a low monthly budget.
For the purposes of this study, we assumed a standard 20% down payment, which equates to $200,000 on a million dollar home. This means a new homeowner would have an outstanding mortgage balance of $800,000. While the Department of Housing and Urban Development (HUD) suggests that your annual housing payment should be no more than 30% of your pre-tax income, a more conservative estimate is 25%. In other words, the ratio between your mortgage and income should be no more than four as a general rule.
This means that, assuming a 20% down payment, a household buying and living in a million-dollar home would need to earn over $200,000 per year.
Discrepancies between the proportion of million-dollar homes and high-income households
Not surprisingly, most American families do not have annual incomes of $200,000 or more. Thus, many cities see a significant gap between the proportion of million-dollar homes and the number of families able to afford them.
The gap is widest in San Francisco, a city widely known for its affordable housing. Although 73% of homes are worth $1 million or more, less than 42% of households in the city earn $200,000 or more annually.
In an additional 16 cities, the gap between the share of million-dollar homes and the share of households able to afford them is more than 10%. Only four of them are outside California and Washington. These include Boulder, Colorado; Miami Beach, Florida; Honolulu, Hawaii; and New York, New York.
Lack of strength of boulders
The difference between the percentage of million dollar homes in Boulder and the number of families able to afford them is particularly interesting given the recent increase in home values. In 2015, only 14.4% of homes were valued at $1 million or more, while in 2021 it was 44.4%.
While not everyone is currently looking to buy a home (and some homeowners may have seen a bigger return on investment on their previous home purchase due to these increases), this bodes poorly for renters. The mismatch in affordability is more than 27 percentage points, or nearly three in 10 residents. Specifically, more than 44% of homes in Boulder are worth at least a million dollars, while less than 17% of households earn $200,000 or more annually.
Share of million-dollar homes expected to continue to rise
Despite significant gaps in affordability in many large cities, many experts expect the share of million-dollar homes to grow. Jennifer Spinelli, founder and CEO of Niche Home Buyer in Albuquerque, New Mexico, says:
“Real estate experts are predicting a major increase in the number of million-dollar homes across the country. The trend is driven by an influx of wealthy buyers looking to invest in luxury properties and a steady increase in property values in some areas.”
This affects both buyers and sellers. Spinelli adds:
“Buyers should act quickly when they find a home they’re interested in and be willing to pay more for it than they would have a few years ago. On the other hand, this could open up opportunities for sellers who want to extract more money at a higher price.”
Methodology
Data for this report is drawn from the Census Bureau’s American Community Survey. To calculate the percentage of million-dollar homes, we divided the number of million-dollar homes by the total number of owner-occupied housing units in each area. In total, we considered 372 cities with available data.
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