The real estate market in the United States has seen a significant increase in the number of million-dollar cities. According to a recent analysis by Zillow, there are now 550 “million-dollar” cities in the country, marking an increase of 59 cities from the previous year. This surge in million-dollar cities is attributed to the mortgage lock-in effect, which has discouraged homeowners with low mortgage rates from selling their properties. As a result, the supply of homes in these areas has been limited, leading to higher sale prices for the few available properties.
California leads the pack with the most million-dollar cities, boasting a total of 210. This number is 12 higher than the previous year and exceeds the combined total of the next five states with the most million-dollar cities. The high number of million-dollar cities in California is a reflection of how the lock-in effect has impacted the supply of homes in the state. Sellers in these areas are just as sensitive to interest rates as buyers, contributing to the scarcity of available properties.
While some areas have seen an increase in million-dollar cities, others have lost their status as home values have changed. In locations where homeowners already had relatively high interest rates prior to the lock-in effect, the increase in supply has been more noticeable. This can be seen in areas where new construction is on the rise, encouraging more sellers to put their homes on the market.
Florida and Texas, two states known for their luxury real estate markets, have also experienced shifts in their million-dollar cities. Florida lost three million-dollar cities, including Siesta Key, Santa Rosa Beach, and Sanibel, while Texas lost Sunset Valley and Volente. Despite these losses, both states are still home to a significant number of million-dollar cities, with Florida having 32 and Texas having 14 as of February, according to Zillow data.
The rise in million-dollar cities in the U.S. is a reflection of the impact of the mortgage lock-in effect on the real estate market. While some areas have seen an increase in million-dollar properties, others have experienced changes in home values that have led to a loss of their million-dollar status. It will be interesting to see how the real estate market continues to evolve in the coming years, especially as interest rates and supply dynamics play a significant role in shaping the market.