The housing market continues to be a hot topic across the United States, and California remains at the center of the conversation. With skyrocketing home values and fierce competition for available properties, navigating the California housing market can feel like a rollercoaster ride. Let's delve into the current trends and what buyers and sellers can expect.
Housing Market Update: 550 Places Where Homes Cost Over $1 Million
Nationally, the housing market is experiencing a comeback. Zillow reports a record number of “million-dollar cities,” with over 550 locations boasting a median home value exceeding $1 million. This is a significant increase from last year, highlighting a national trend of rising home prices. California takes the crown for the state with the most million-dollar cities, boasting a whopping 210 – that's more than the next five states combined!
California vs. The Rest
The Golden State's housing market is a distinct entity compared to the rest of the country. While affordability remains a major challenge for California homebuyers, the competition for available properties continues to drive prices upwards. This tight supply combined with high demand creates a seller's market, with attractive homes receiving multiple offers.
There's a glimmer of hope for buyers entering the California market this year. As the effects of “rate lock” wane, new listings are increasing. Additionally, if mortgage rates drop later in the year as some predict, it could trigger a second wave of buyer demand, potentially pushing prices even higher.
While million-dollar cities were hit harder than the average U.S. market during the 2022 housing slump, their recovery generally reflects the national trend. The typical U.S. home value has grown by 4.2% year-over-year, and million-dollar cities haven't strayed far behind with a median growth rate of 4.6%.
California's housing market dominance is undeniable. By February 2024, the state boasted 210 million-dollar cities, a significant increase of 12 from the previous year. This puts California in a league of its own, with more million-dollar cities than the next five states combined: New York (66), New Jersey (49), Florida (32), Massachusetts (31), and Colorado (21).
This dominance is likely due to a combination of factors, including California's robust economy, desirable climate, and limited land availability, especially in coastal areas. These factors have fueled high housing demand and pushed median home values well above the million-dollar mark in many parts of the state.
Million-Dollar Cities by State
| State | $1 Million Cities: February 2024 | $1 Million Cities: February 2023 |
| California | 210 | 198 |
| New York | 66 | 54 |
| New Jersey | 49 | 35 |
| Florida | 32 | 34 |
| Massachusetts | 31 | 27 |
| Colorado | 21 | 21 |
| Washington | 18 | 16 |
| Hawaii | 17 | 16 |
| Texas | 14 | 15 |
| Maryland | 10 | 8 |
| Virginia | 7 | 5 |
| South Carolina | 6 | 6 |
| Connecticut | 6 | 5 |
| Minnesota, Utah | 6 | 4 |
| Illinois | 6 | 3 |
| Missouri | 5 | 5 |
| Nevada, North Carolina, Wyoming | 4 | 4 |
| Montana | 4 | 3 |
| Arizona | 4 | 2 |
| Idaho, Tennessee | 3 | 3 |
| New Hampshire | 3 | 2 |
| Ohio | 2 | 2 |
| Pennsylvania | 2 | 0 |
| Delaware | 1 | 2 |
| Georgia, Kansas, Maine, Michigan, Rhode Island, Wisconsin | 1 | 1 |
New York Metro Takes the Lead
The New York City metro area, encompassing a significant portion of New Jersey and spilling into parts of Pennsylvania, reigns supreme with the most million-dollar cities at a staggering 106 – a remarkable increase of 24 compared to last year. This dominance can likely be attributed to a combination of factors.
The economic power of New York City, coupled with its status as a global financial center, attracts a large pool of high-earning professionals who can afford million-dollar homes. Additionally, the limited developable land in the area, particularly in Manhattan and Brooklyn, restricts housing supply and puts upward pressure on prices.
This trend extends to the surrounding suburbs in New Jersey and Pennsylvania, where residents can enjoy a less frenetic pace of life while still maintaining proximity to the city's amenities and job market.
While coastal areas reign supreme, some inland metros are showing signs of a million-dollar market. Dallas, with eight million-dollar cities, and Denver, with seven, are the frontrunners in states that aren't coastal.
Looking Ahead
The housing market is a complex landscape with unique characteristics. In states like California and New York, while affordability remains a concern, their allure and limited housing supply continue to drive prices upwards. With new listings emerging and potential mortgage rate drops on the horizon, both buyers and sellers need to stay informed and adaptable to navigate this ever-changing market.
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