Once upon a time, a million-dollar home was a big deal. It meant something. Today, that number doesn’t carry quite the same weight it used to.
The number of owner-occupied U.S. homes valued at $1 million or more has jumped from about 1.5 million in 2005 to 6.9 million in 2024, according to the National Association of Realtors. Those homes now make up 8% of the total housing market. Back in 2005, they accounted for just 2%.
Where the Numbers Are Most Dramatic
If you own a home in Hawaii, there is a good chance it falls into that category. About 40% of owner-occupied homes there are now valued at $1 million or more. Around one-third of homes in California and Washington, D.C., have crossed that line as well.
On the other end, million-dollar homes make up about 1% of properties in Mississippi, North Dakota, and West Virginia. So where you live still matters enormously.
What Experts Are Saying
Billy Rose, founder and vice chairman of real estate brokerage The Agency, told FOX Business that the $1 million mark stopped meaning luxury in Los Angeles a long time ago.
“In L.A., it seems like there’s so much wealth here and there’s so much elevated housing that the million-dollar threshold now is truly entry,” Rose said.
He added that some first-time buyers in the Los Angeles area start their searches at around $2.5 million or $3 million. That is a number that would have seemed remarkable to most of us not so long ago.
Rose also described a standoff happening in many markets right now. Sellers are holding firm to values set when borrowing costs were lower. Buyers are waiting for prices to come down. Rose called it a staring contest between buyers and sellers.
The $1 Million Cutoff Still Changes Behavior
Here is something worth knowing if you are buying or watching the market. Since 2015, about 2.4 times more homes have sold just below $1 million than just above it, according to NAR. Buyers often set their search filters below that round number. Different mortgage requirements can kick in at that threshold, too.
Taxes play a role, too. New York’s mansion tax has applied to home purchases of $1 million or more since 1989. That same $1 million, adjusted for inflation, would equal about $2.7 million today. The tax adds $10,000 to the purchase of a $1 million home.
Rose suggested those thresholds need to be updated to keep pace with what homes actually cost now.
A Widening Gap
This is not just an American story. In markets near Toronto, 1 million Canadian dollars (about $724,000 U.S.) no longer buys true luxury either, according to Steve Bailey of The Agency. He said luxury properties there generally start closer to 1.7 million to 3 million Canadian dollars, or roughly $1.2 million to $2.2 million U.S.
Back in the U.S., a recent Zillow report found that demand for luxury homes is growing while sales of starter homes are softening as more inventory builds in that lower segment.
Rose described the overall trend as a K-shaped economy, one in which wealthy buyers have more financial flexibility while buyers with less means face growing pressure.
“It’s creating a larger divide between the haves and the have-nots,” he said.
If you own a home that has climbed into seven-figure territory, that is real wealth. But it is also a reminder of just how much the market has shifted, and how much the old yardsticks no longer apply.
