There is a record number of areas in the U.S. where the “typical” home is worth $1 million or more.
In February, the country had 550 “million-dollar” cities, or areas where the “typical” home value is $1 million or more, according to a new analysis by Zillow. That is a gain of 59 cities from 2023, and edges out the previous record of 522 such cities when home values peaked in 2022.
The boost in million-dollar cities is a result of the mortgage lock-in effect, which deterred homeowners with extremely low rates from listing their properties for sale, said Skylar Olsen, chief economist at Zillow. The dynamic is keeping supply limited in some markets and elevating sale prices for those few available properties.
“Interest rate lock-in causes the sellers to just hold,” Olsen said.
It is also worth noting that some of these places have historically catered to the very wealthy, said Jacob Channel, a senior economist at LendingTree.
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California has the most million-dollar cities, with 210. That is 12 more than a year ago and more than the next five runner-up states — New York, New Jersey, Florida, Massachusetts and Colorado — combined, Zillow found.
Even though there are more million-dollar cities this year, the record amount is connected to how the lock-in effect is affecting an area’s supply, according to Olsen.
“The seller is as sensitive to the interest rate [as buyers],” she said.
Meanwhile, some areas lost the “million-dollar” status. In places where many homeowners already had interest rates between 6% and 7%, the lock-in effect is not as strong.
Such places are seeing an increase in supply with more sellers willing to put homes on the market, Olsen said.
“In those places where we’ve lost million-dollar cities … they’re not as locked in, and they have a lot more of that new construction that helps that picture, too,” she said.
Florida lost three million-dollar cities — Siesta Key, Santa Rosa Beach and Sanibel — while Texas lost Sunset Valley and Volente, two areas near Austin.
But it is hard to say if that is a trend, Channel said. Florida and Texas are both states that are still homes to high-cost, luxury markets, with 32 and 14 million-dollar cities, respectively, in February, per Zillow data.
Naples, Florida, also boasts the most expensive home for sale in the U.S., which hit the market in February for $295 million.