Million-dollar homes lose luxury status as U.S. housing prices soar

According to a National Association of Realtors analysis, the share of U.S. owner-occupied homes priced at $1 million or more has climbed from about 2% of the market two decades ago to 8% today, with the total number increasing from roughly 1.5 million in 2005 to 6.9 million in 2024. The shift is most pronounced in expensive locales: about 40% of homes in Hawaii and roughly one-third in California and Washington, D.C. meet the threshold, whereas only around 1% do so in Mississippi, North Dakota and West Virginia.

Billy Rose, founder and vice chairman of The Agency, notes that in Los Angeles a $1 million price tag is now considered entry-level, with many first-time buyers looking at $2.5-$3 million homes. He attributes the buyer-seller stalemate to sellers holding onto values from periods of lower borrowing costs while buyers wait for more favorable pricing. The $1 million line also influences search behavior, with sales just below the mark outpacing those just above it since 2015, partly due to mortgage and tax considerations such as New York’s mansion tax.

The Agency’s Steve Bailey observes a similar erosion of luxury standards north of the border, where Canadian homes need to reach 1.7-3 million Canadian dollars to be deemed high-end. A Zillow report adds that luxury demand is rising even as starter-home sales soften, reflecting a broader “K-shaped” economy that widens the gap between affluent and lower-income buyers.