Though home prices have remained steep after rapid growth during the height of the pandemic, paying $1 million or more for a house may seem excessive to most Americans. That said, just because most people aren’t spending seven figures on a house doesn’t mean million-dollar homes aren’t prevalent in some parts of the U.S.

To see where million-dollar houses are most common, LendingTree analyzed housing data to find the share of million-dollar homes in each of the nation’s 50 largest metropolitan areas. Here's what we found. 

• Million-dollar homes are relatively uncommon in most of the country. An average of 6.68% of owner-occupied homes in the nation’s 50 largest metros in 2021 were valued at $1 million or more. However, the share of million-dollar homes is growing. According to our research last year, an average of just 4.71% of owner-occupied homes in the nation’s 50 largest metros in 2020 were valued at $1 million or more.
• San Jose and San Francisco, Calif., have the largest share of million-dollar homes. Respectively, 66.28% and 52.91% of owner-occupied homes in these metros are worth $1 million or more — making them the only two in our study where a majority of homes are worth at least $1 million.
• Including San Jose and San Francisco, the four metros with the highest percentage of million-dollar homes are in California.
• Only four metros — Buffalo, N.Y., Cleveland, Pittsburgh and Louisville, Ky. — have fewer than 1.00% of owner-occupied homes valued at at least $1 million. 

You can check out our full report here: https://www.lendingtree.com/home/cities-with-the-largest-share-of-million-dollar-homes/

LendingTree's Senior Economist and report author, Jacob Channel, had this to say:

"Remember that million-dollar homes aren’t always synonymous with “luxury homes.” On the contrary, a home worth a million dollars may be seen as firmly middle-class and anything but extravagant in many places, like San Jose and San Francisco. Unless a concerted effort is made to build more affordable housing, especially in the nation’s big cities, million-dollar-plus homes are going to become more and more common, even if they don’t become more affordable.” 

Many New Home Shoppers are Still Motivated to Buy Regardless of Housing Affordability Challenges

Today, the experts at Zonda, the housing industry's foremost advisors, released the New Home Market Update report for May 2023.

We are in the "life happens" housing market, one where sales are driven primarily by changes in life stage and lifestyle. Marriage, divorce, death, retirement, downsizing, having children, and relocating encourage a move despite the mortgage lock-in effect, housing affordability challenges, and economic uncertainty. In other times, investors, flippers, fear of missing out, and moving out of 'want' versus 'need' were more prevalent.

The overall demand pool is down compared to the past few years, but the lack of inventory is keeping prices firm and competition high for desirable homes. Many builders continue to benefit from the ability to compete with the resale market by offering quick move-in homes, the ability to work with the discerning buyers by offering customization on to-be-built product, and the ability to help the affordability-challenged buyer by offering mortgage rate buydowns and funds towards closing costs.

"Consumer demand for housing has defied logic throughout 2023," said Ali Wolf, Zonda's chief economist. "This is testament to the demographic tailwinds of today's market and the inherent desire for homeownership. We are continuing to watch the depth of today's buyer pool, though, given mortgage rates are at or near 7.0% again and home prices back on the rise."

May sales remained high but ticked down from April
Zonda's new home sales metric counts the number of new home contract sales each month and accounts for both cancellations and seasonality. This metric shows there were 704,853 new homes sold in May on a seasonally adjusted annualized rate. This was a decline of 1.6% from last month but an increase of 11.2% from a year ago. On a non-seasonally adjusted basis, 62,559 homes were sold, down nearly 13% year-over-year and compared to the same month in 2019.

Sales adjusted for supply hold steady
Total sales volume is influenced by both supply and demand. Zonda's New Home Pending Sales Index (PSI) was created to help account for fluctuations in supply by combining both total sales volume with the average sales rate per month per community. The May PSI came in at 139.5, representing an 11.9% rise from the same month last year. The index is currently 19.9% below cycle highs. On a month-over-month basis, seasonally adjusted new home sales increased 0.1%.

• The markets that posted the best numbers relative to last year were Salt Lake City (+44.1%), Sacramento (+41.4%), and Seattle (+33.5%).
• The metros that performed the worst year-over-year were New York (-16.4%), Philadelphia (-11.7%), and Atlanta (-6.9%).
• On a monthly basis, Salt Lake City, Sacramento, and Seattle were the best performing markets.

A continued deceleration in home price appreciation
National home prices increased year-over-year across entry-level, move-up, and high-end homes. Prices rose 2.5% for entry-level to $339,084, 2.5% for move-up to $529,945, and 6.2% for high-end homes to $920,483.

Supplementing our data with a monthly survey Zonda conducts, 60% of builders reported raising prices in May and 34% reported holding prices flat. This stands in direct contrast to the end of last year where roughly 50% of builders were lowering prices and 50% were holding prices flat.

Incentives are still common in today's housing market to help address the affordability constraints for buyers. The majority of new home communities across the country were offering incentives in May, with the most popular being mortgage rate buydowns, funds towards closing costs, and flex dollars.

Total community count is far below 2019 levels
There are currently 13,814 actively selling communities tracked by Zonda, up 0.6% from last year. On a month-over-month basis, the national figure slipped 2.5%. Total community count is 28.6% below the same month in 2019. The lack of competition from other new home communities is allowing for some upward pressure on the average sales rate per month per community. Zonda defines a community as anywhere where five or more units are for sale.

• Riverside/San Bernardino (+24.3%), Salt Lake City (+14.0%), and Los Angeles/OC (+12.0%) grew community count the most year-over-year. Community count is down 7%, 31%, and 45%, respectively, compared to 2019.
• Relative to last year, the biggest community count declines were in Tampa (-11.6%), Philadelphia (-9.1%), and New York (-8.5%). Tampa's community count is 51% below 2019 levels. Community count is down 46% and 36%, respectively, in Philadelphia and New York compared to 2019.
• Community count in 8% of our select markets rose month-over-month, 8% were flat, and 84% fell.

National quick move-ins (QMIs) totaled 23,818, up 49.6% compared to last year but 13.3% lower month-over-month. Total QMIs are 32.2% above 2019 levels. QMIs are homes that can likely be occupied within 90 days.
QMIs are selling out quicker than they can be replaced in many markets as consumers view these homes as a great alternative to the resale market given the dearth of supply.

• On a metro basis, 80% of Zonda's select markets increased QMI count year-over-year.
• The markets that grew the most year-over-year were Jacksonville (+165.6%), Phoenix (+152.0%), and Riverside/San Bernardino (+113.8%).
• The markets with the most total QMIs coincide with the largest production housing markets across the country: Dallas, Houston, and Phoenix.
• Jacksonville, Las Vegas, and Sacramento have seen the most growth in QMIs compared to the same time in 2019, up 498.8%, 195.3%, and 173.0%, respectively.
• QMIs are down the most compared to 2019 in Seattle (-65%), Atlanta (-57%), and San Francisco (-53%).

Methodology
The Zonda New Home Pending Sales Index (PSI) is built on proprietary, industry-leading data that covers 60% of the production new home market across the United States. Reported number of new home pending contracts are gathered and analyzed each month. Released on the 15th business day of each month, the New Home PSI is a leading indicator of housing demand compared to closings because it is based on the number of signed contracts at a new home community. Zonda monitors 18,000 active communities in the country and the homes tracked can be in any stage of construction.

The new home market represents roughly 10% of all transactions, allowing little movements in supply to cause outsized swings in market activity. As a result, the New Home PSI blends the cumulative sales of activity recently sold out projects with the average sales rate per community, which adjusts for fluctuations in supply. Furthermore, the New Home PSI is seasonally adjusted based on each markets' specific seasonality, removes outliers, and uses June 2016 as the base month. The foundation of the index is a monthly survey conducted by Zonda. It is necessary to monitor both new and existing home sales to establish an accurate picture of the relative health of the residential real estate market.

Visit ZondaHome.com or follow us on LinkedIn and Facebook for more information.

About Zonda
Zonda provides data-driven housing market solutions to the homebuilding industry. From builders to building product manufacturers, mortgage clients, and multifamily executives, we work hand-in-hand with our customers to streamline access to housing data to empower smarter decisions. As a leading brand in residential construction, our mission is to advance the home building industry, because we believe better homes mean better lives and stronger communities. Together, we are building the future of housing.

Mortgage rate lock-in will continue to be a major challenge for the housing market in the remainder of 2023, according to the Realtor.com^® 2023 Forecast Update. While prices have eased slightly, higher mortgage rates are hurting affordability, and many of those who already own a home are not incentivized to list. As a result, the total number of homes for sale (projected to be down 15.8% to 4.2 million) is likely to be at its lowest point since 2012. On the rental side, prices are expected to drop slightly on the year (-0.9%), as strong multi-family construction is improving inventory.

“High inflation and the Fed’s actions to curb it have had a significant impact on the housing market this year. And while inflation has begun to ease, the sustained spike in mortgage rates was enough to stifle the housing market after several years of low rates and strong activity,” said Realtor.com^® Chief Economist Danielle Hale. “The housing market has really seen a double whammy in 2023, with a retrenchment in the number of homes for sale coupled with still-high prices and mortgage rates that have kept both first-time and repeat buyers on the sidelines.” 

Revised 2023 Housing Forecast

Affordability improving, but still a long way to go

Home prices have been supported by persistent underbuilding relative to household growth over the last decade, but low affordability has had an outsized impact on demand. As a result, Realtor.com^® now expects a modest decline in home prices of 0.6% for the year. The expectation is that mortgage rates will also be slightly lower than originally anticipated, but not low enough to bring down buying costs until the end of the year. As inflation is expected to cool gradually, we expect that mortgage rates will start to do the same beginning mid-year and nearing 6% by the end of the year. For the year as a whole, the cost of a mortgage is expected to be up 10.5% compared to 2022.

Mortgage rate lock-in effect impacting inventory

Realtor.com^® expects home sales to decline 15.8% in 2023 for a total of about 4.2 million sales for the year, the smallest annual total since 2012. Mortgage rate lock-in has been a stronger factor than initially expected, and the number of homes for sale has not met initial projections. As a result, the expectation now is for inventory levels to slip 5% for the year, and not the growth projected in the initial forecast.

“The vast majority of homeowners locked in low rates during the pandemic and aren’t particularly excited to give them up in order to buy a new home, unless they really need to move for personal reasons,” said Hale.

Rental prices pull back

Challenging conditions in the housing market will lead many to continue renting, driving ongoing demand for rentals through the second half of 2023. However, the strong uptick in new multi-family construction and people choosing to stay in their unit in order to save money is likely to decrease competition for new units and lead to a slight annual decline in rental prices (-0.9%). However, despite this pull-back, rental prices are still historically high with the average rent about $350 more than it was pre-pandemic.

Other economic factors to consider

Despite the Fed’s tightening, the economy and labor markets have shown resilience. And while paychecks haven’t kept pace with inflation, Americans have dipped into pandemic savings and continued to spend money. While this is boosting the current economy, it could have an impact in the future if consumers burn through savings and need to rely on high-interest debt.

The manufacturing industry plays a crucial role in producing components for automobiles, electronics, medical devices, machinery, and other systems. These components bring ideas to life, transforming them into tangible products. Consider the device you are using to read this article – it likely contains both internal and external manufactured components. The manufacturing industry is continuously evolving at an exponential pace.

In the past, I have extensively researched and written about a remarkable technological advancement that is causing significant disruptions across multiple industries. Today, I want to remind all the forward-thinking leaders that this application is accelerating even faster now and will continue to do so in the future: Artificial Intelligence (AI).

Assuming that AI won’t affect your business or organization simply because it hasn’t directly impacted you yet is a critical mistake. AI, autonomous machinery, and AI-enabled software and hardware are here to stay. They are certainties for the future, known as Hard Trends.

However, the manufacturing industry’s technological changes encompass numerous other Hard Trends that offer valuable insights for adapting and anticipating their strategic impact on your business. I have compiled a collection of 12 such Hard Trend future certainties that are already reshaping the manufacturing landscape.

Here is an updated look into each one:

1. 1. The integration of AI is growing at an exponential rate.

AI is a type of machine intelligence that encompasses machine learning, deep learning, and cognitive computing. It is now more commonly available as a service, which reduces the initial investment required and saves both time and money when it comes to mundane tasks. It is crucial to remember that these processes are meant to collaborate with humans in groundbreaking ways, rather than working against them or attempting to replace them.

2. 2. The progress in AI propels the development of augmented thinking and augmented movement.

Augmented thinking leverages AI-enabled analytics to deliver immediate and practical human insights, while augmented movement enhances human capabilities. This is the realm where the human aspect of collaborating with AI and different forms of autonomous technology becomes significant. Tasks that were once arduous or unattainable for humans alone can now be accomplished with the assistance of AI applications.

3. 3. Accelerated Expansion of Semiautonomous and Fully Autonomous Technology

AI and networked motors, actuators, and sensors are already employed in various autonomous technologies to automate diverse functions. Semiautonomous technologies, on the other hand, combine human input with predefined parameters to grant autonomous functions a level of control. Similar to the progress in augmented thinking and augmented movement, individuals involved in manufacturing will evolve into troubleshooters and critical thinkers responsible for maintaining the operational efficiency of AI applications.

4. 4. The Rapid Advancement of Voice Commerce, Business Bots, and Voice-Enabled Products with AI and Wireless Broadband

The rising popularity of smart e-assistants and chatbots extends across professional industries. This familiar form of AI technology, exemplified by Siri and Alexa in our personal lives, is swiftly finding its way into the manufacturing sector through application bots. In the manufacturing workspace, one can observe the presence of Siri-like virtual assistants on various machinery, leveraging intelligent sensors to gather real-time data and anticipate mechanical issues. This integration enhances productivity by enabling proactive measures.

5. 5. An Increase in Datafication Further Drives AI-Enabled Analytics

Big Data is a phrase that encompasses technologies employed to capture and harness the exponentially growing data from diverse sources. Edge computing, a process that involves analyzing data in close proximity to its origin, facilitates fast and efficient data processing and implementation. In the manufacturing sector, where an immense volume of data is generated daily, AI applications leverage this data to provide enterprise-wide visibility and valuable insights. This empowers users to swiftly make crucial decisions based on accurate information.

6. 6. Cloud Computing Provides Integral Digital Transformations

Businesses are poised to adopt different forms of cloud computing applications, including public, private, hybrid, and personal clouds. This shift in software, hardware, and computing capacity acquisition and maintenance not only reduces costs but also expedites IT processes. The integration of innovative cloud computing platforms and services with AI applications enables rapid product creation, service development, and market exploration across diverse industries.

More Tech Trends Redefining Manufacturing

7. 7. Increasing Virtualization of Software and Hardware

Businesses are increasingly adopting the virtualization of software and hardware to enhance cybersecurity measures, leveraging Hardware as a Service (HaaS) and Software as a Service (SaaS) models to establish “IT as a Service” environments. With the ongoing growth of virtualized processing power, mobile devices are transforming into powerful supercomputers, fostering innovation within the manufacturing sector. Envision the remarkable advancements that will unfold when AI-enabled applications seamlessly integrate with these streamlined services!

8. 8. Increasing Virtualization for Everything as a Service (XaaS)

The rapid adoption of cloud-based platforms expedites the virtualization of processes, facilitating the efficient updating and deployment of new services. This trend has extended to diverse applications in various industries, such as Videoconferencing as a Service, Collaboration as a Service, and HR as a Service. Consider the possibilities when AI as a Service becomes accessible, lowering entry costs for manufacturers to integrate autonomous technology into their operations!

9. 9. Virtual Reality and Augmented Reality Take Hold

Augmented reality (AR) presents a distinct form of digital disruption, enabling users to utilize a digital camera to superimpose real-time information onto objects. On the other hand, virtual reality (VR) offers a complete immersion into virtual environments. In the manufacturing industry, AR glasses and VR headsets will increasingly become the standard, enabling wearers to troubleshoot machinery on-site or work remotely in a field traditionally dependent on on-site presence.

10. 10. The utilization of additive manufacturing enhances efficiency across industries

Additive manufacturing processes, commonly referred to as 3D printing, have become an essential component in numerous industries, particularly in light of existing and persistent challenges in the global supply chain. Initially intended for prototyping purposes, 3D printers now play a crucial role in producing various products such as automotive lighting components, medical equipment, smartphone cases, jet engines, buildings, and notably, prosthetic limbs. In essence, this technology enables companies to swiftly manufacture items while reducing overhead expenses and shortening lead times.

11. 11. Internet of Things and Edge Computing Increase, Forming the Internet of Everything

The expansion of the Internet of Things (IoT) will be propelled by machine-to-machine communications, facilitated by chips, microsensors, and wired or wireless networks. This integration of networked sensors will enable the sharing of real-time data and the execution of diagnostics and repairs with minimal human intervention. Consequently, the Internet of Everything (IoE) will gain further momentum. With this evolution, edge computing will also witness significant growth, consolidating the data generated by IoT and IoE. This, in turn, will deliver instant insights and enable on-the-spot actions at the point of use.

12. 12. Wireless broadband growth enhances global networking and device connectivity.

The rapid and responsive 5G connectivity, with the upcoming certainty of 6G networks, empowers manufacturers to establish secure and swift public or private 5G networks within their operations. The availability of connectivity worldwide continues to expand, reinforcing the trend of virtualizing the workplace and propelling us towards a more interconnected and efficient global society.