With its underlying nuance of inaccessibility and unaffordability, the word “luxury” becomes a highly contentious term when used in the world of housing and real estate. Although some urban planners hail the long-term benefits of luxury development, others bring equally strong arguments against it. For its supporters, high-end housing is never enough. For its detractors, luxury inventory is too much as it is.
However, luxury housing is far from a homogenous national market. So, to determine how luxurious the American real estate market is, we analyzed the housing inventory in 30 large cities, 30 mid-sized and 30 small cities. We looked at the share of homes above $1 million, $3 million and $5 million (where available) to rank these places according to the availability of luxury housing.
Here are the main takeaways:
- Demand for and sales of luxury homes exploded. According to the National Association of REALTORS® (NAR), the number of homes sold for more than $1 million rose by 81% to 17,216 in February, from 9,635 one year earlier.
- Big cities: Given that the median price in San Francisco is $1.5 million, it’s no surprise that this city has the highest share of homes above $1 million and the highest percentage of high-end properties priced over $3 million, but Los Angeles dominates the ranking when it comes to the share of high-end homes for sale above $5 million.
- Mid-sized cities: Santa Clarita has more luxury properties with a price tag over $1 million than even San Francisco, and five other mid-sized cities have a share of luxury listings above 10%: Glendale, CA; Huntington Beach, CA; Oxnard, CA; Salt Lake City, UT and Frisco, TX.
- Small cities: In Glendora, CA, 41.2% of the entire inventory of homes for sale is represented by luxury homes with an asking price above $1 million. Four other small markets boast a share of luxury inventory above 10%: Aliso Viejo, CA; Placentia, CA; Queen Creek, AZ and Galveston, TX.
Luxury Homes Sales Have Taken Off
According to the NAR, quoted by USA Today, “luxury sales outpaced sales of homes across all other price ranges.”
The number of homes sold for more than $1 million rose by 81% to 17,216 in February, from 9,635 a year earlier. At the same time, the number of homes sold for under $100,000 fell 26% to 22,569 from 30,382 a year earlier.
In the Midwest, the volume of homes sold for above $1 million doubled in the same period. In the Northeast, the number increased by 98%. In the South, it was up by 94%.
Luxury can have many meanings, and luxury housing is a label that can be attached to almost any type of development, from truly opulent properties boasting lavish features to market-rate homes which flaunt merely pleasant finishes and somewhat cushy amenities
But although buzzwords and enticing home descriptions make it seem like luxury is in the eye of the beholder, price is the objective factor that separates more common homes from the truly luxurious ones. While homes in some smaller markets that are more than $1 million can be considered luxury real estate, in other, larger cities only properties above the $3-million, and even the $5-million threshold make it into the luxury category.
And the luxury category has been receiving a lot of attention recently, especially since the pandemic and subsequent lockdowns made having more space even more appealing, sending many (affluent) buyers into a home shopping frenzy.
Large Cities Redefine Luxury: $1M Homes Are the Majority in Three Big Markets
In most markets and for most people, $1-million buys a luxury home. But in cities like San Jose, CA, where the median home price is $1,140,000 and San Francisco, where median prices are hovering around $1.5 million, luxury housing cannot mean properties around the $1-million price point. Here, and in a few other, mostly coastal markets, true luxury begins in the over-$3 million price range, and even over-$5 million threshold in some cities.
Of the 30 largest U.S. cities, San Francisco is the absolute winner when it comes to the share of inventory over $1 million and $3 million, but Los Angeles has the largest share of homes over $5 million on the market. There are three big cities where more than half of all available inventory is above $1 million, and they are naturally the markets with the highest median prices as well: San Francisco, Los Angeles and San Jose.
The ranking changes when looking at the share of homes over $3 million. Boston takes the second spot, right after San Francisco and followed by Los Angeles. Two more cities, New York and San Diego, boast a share of homes over $3 million that represents more than 10% of the total available inventory of homes for sale.
In the over $5 million category, Los Angeles rules supreme: It’s the only large market where more than 10% of the available housing inventory is at least $5 million.
At the other end of the ranking, El Paso, TX would seem to be the least luxurious of all 30 large cities: No homes are for sale over $3 million nor $5 million. In fact, only 0.6% of all homes for sale are more than $1 million, meaning this Texas city is the most affordable large market.
At Least 10% of Listings are Luxurious in These Six Mid-Sized Markets
Six mid-sized U.S. markets have a rather generous supply of homes over $1 million. One California city, Santa Clarita, surpasses even San Francisco when it comes to the share of luxury homes priced at $1 million and above. With nearly 70% of its entire inventory above the million-dollar mark, Santa Clarita earns the title of most luxurious mid-sized market.
Coming in at #2, Glendale, CA may have only the second-highest share of homes over $1 million (42.5%), but homes here are the most expensive of all 30 mid-sized cities in the analysis, with a median price just over $1 million.
At the other end of the spectrum, seven markets in this category have few luxury homes for sale, with a share of million-dollar homes lower than 1%. Grand Prairie, TX; Rochester, NY; Aurora, IL; Montgomery, AL; Akron, OH; Fontana, CA and Columbus, GA have a total share of luxury homes for sale of 0.6% at most.
Of these, Akron, OH also bears another mark of affordability: At $120,000, the median home price here is much lower than the national average, which is nearly $330,000, according to NAR.
Small Cities, Big Luxury: 10 to 40% of Inventory in Five Markets Are High-End Homes
For those who want to get away from large urban hubs and buy a spacious, high-end home in a smaller city, there are quite a few options. Three California cities, one Arizona city and one in Texas have significant shares of luxury homes.
Glendora, CA stands out, with a whopping 41.2% of its available homes for sale boasting prices around or over $1 million. Less than 25 miles from Los Angeles, it makes sense that the “Pride of the Foothills” has such an impressive share of high-end listings.
Four other small cities, with a population just over 50,000, have a share of luxury listings above 10%: Aliso Viejo, CA; Placentia, CA; Queen Creek, AZ and Galveston, TX.
Surprisingly, eight of the small cities included in the analysis had no homes for sale that were over $1 million at the time of our analysis. Among them, Methuen Town, MA: Despite a rather high median home price, no luxury homes above $1 million could be found in this city at the time the data for the analysis was gathered.
No matter the type of city they would like to move to, American high-end buyers have plenty of options. Big, established hubs like San Francisco and New York are obvious choices, but mid-sized and smaller, up-and-coming markets such as Santa Clarita, CA; Tacoma, WA or Queen Creek, AZ also have significant shares of luxury homes waiting for the right buyer.
- The 30 cities for each category were selected based on population:
- Markets with at least 500,000 people were included in the “Big Cities” category and range from 617,638 people to 8,336,817 people.
- Markets with at least 150,000 people were included in the “Mid-Sized Cities” category and they range from 194,543 people to 217,827 people.
- Markets with at least 50,000 people were included in the “Small Cities” category and they range from 50,094 to 52,127.
- The types of residential properties included in the analysis of inventory were house, townhouse, single family, condo, coop, manufactured, mobile, apartment.
- For the final list of active listings in each city, we examined and counted listings from Point2, Zillow, Redfin and Realtor. To calculate the share of luxury real estate and create the final ranking, we selected and used the source that had the biggest number of listings available, after eliminating the duplicates.
- The study was based on all active listings at the time of the analysis (July 5).
- For consistency purposes, the over-$1M category includes all luxury homes above this price in all 90 cities analyzed. In big cities, the shares of homes over $3M and over $5M were calculated as well for a more granular perspective, but they are included in the over $1M category too.
- Median home prices were sourced from local MLS’s, realtor associations and reports from local listing portals.
Fair use and redistribution
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