The number of million dollar homes has nearly doubled since 2012, but this time it doesn’t seem to be fueled by foreign buyers.
Million dollar homes used to be a rarity, but its become the norm in certain U.S. markets. According to data from Trulia, the share of million dollar homes in the U.S. has nearly doubled, from 1.6% to 3%.
No surprise, San Francisco had the largest increase in the share of million dollar homes in the country – to 57.4% this year, up from 19.6% of homes in 2012 – just 4 years ago!
San Jose came in 2nd and Oakland 3rd. But this phenomenon is not limited to Northern California. Orange County came in 4th and Los Angeles came in 5th.
Honolulu, San Diego, New York, Ventura County and Seattle made the top 10 list of fastest growing number of million dollar homes.
Seattle had the lowest change. That city was up just 4.5% compared to a 37.8% increase in San Francisco.
When you break it up into neighborhoods, San Francisco’s Westwood Park had the largest increase. The other 4 neighborhoods in the top 5 were in San Mateo. Specifically, Nineteenth Avenue, Southeast Hillsdale, Northwest Hillsdale and Fiesta Gardens.
In Southern California, neighborhoods in Torrance saw the largest increase in million dollar homes, specifically Pacific Colony and Pacific South Bay – right on the border of Redondo Beach. Glendale neighborhoods, Emerald Isle and College Hills, also made the list.
Some neighborhoods in San Diego were new to the million-dollar home club. Specifically, Bella Lago, Sunset Cliffs and Roseville.
It’s interesting that New York actually had the smallest increase in million dollar homes. 12% from 7% – and that price growth was heavily concentrated in Brooklyn.
Perhaps it has something to do with foreign buyers.
According to CNBC, international buyers are still active, but they seem to be hunting down less expensive properties instead of luxury homes. This could be because the strong U.S. dollar makes it cost prohibitive, along with global economic volatility.
Lawrence Yun, chief economist of the National Association of Realtors (NAR) said, “While these obstacles led to a cool down in sales from nonresident foreign buyers, the purchases by recent immigrant foreigners rose, resulting in the overall sales dollar volume still being the second highest since 2009.”
According to NAR’s report on international activity in U.S. real estate, foreign buyers purchased $102.6 billion of residential property in the U.S. between April 2015 and March 2016. Even though that’s a 1.3% decline from last year, the volume of properties purchased rose 2.8%. This means foreigners are buying more property, but at lower price points.
Rick Sharga, executive vice president at TenX said, “We’ve seen at least some evidence that foreign buyers — both investors and people just looking for a home — have begun looking beyond expensive markets like San Francisco, New York City and Washington D.C., and buying properties in smaller, less-expensive cities in the Southeast and Midwest.”
While Chinese buyers were slightly less active than last year, they still bought more U.S. property than any other country. The Chinese spent $27.3 billion on U.S. residential property – that’s 3x as much as Canadian buyers, who ranked second.
The Chinese also bought the most expensive homes – at a median price of $542,084. That may be because U.S. real estate is relatively inexpensive to them, in comparison to what they’re used to at home.
According to NAR, 5 states accounted for half of foreign buyer purchases: Florida (22 percent), California (15 percent), Texas (10 percent), Arizona and New York (each at 4 percent).
Latin Americans, Europeans and Canadians, who tend to favor warmer climates, were most active in Florida and Arizona. Asian buyers headed to California and New York. Texas buyers seemed to be looking for strong investment properties, as demand for single-family rentals there remains strong.