There are 218 cities with a typical home value of $1 million or more, a new real estate report from Zillow found — but the growth of that number is actually slowing down.
While seven new cities were added to the list in 2019, four cities actually fell off the list as their home values declined below the threshold, for a net gain of only three cities in 2019. More than half the cities are near San Francisco, New York, or Los Angeles.
Despite the fact that 218 is still 74 more than there were five years ago, it’s still the first year since 2016 that cities fell off the list.
“The net addition of three $1 million cities is easily the lowest in recent years, a reflection of the slower market last year,” the report said.
New additions to the list include Santa Ynez, California; Telluride, Colorado; Forest Hills, Tennessee; Sierra Madre, California; McLean, Virginia; Moose, Wyoming; and Redondo Beach, California.
Real estate values dropped below $1 million in San Jose, California; San Quentin, California; Lexington Hills, California; and Laie, Hawaii.
“An average of just under 20 cities a year broke the $1 million threshold from 2014-2018, including a high of 25 in 2017 when home value growth was approaching 7% per year,” the report said.
However, this slowdown isn’t a cue to panic. Instead, the report said, it is a signal that the real estate market is becoming more balanced, and that pricing is becoming more realistic.
“More than just slower growth, home values good and truly fell in many of these luxury hubs, a sign that the excessive home value appreciation of the past several years drove prices too high — even beyond the reach of those who could afford almost anything almost anywhere else,” the report said.
Who is poised to potentially join the pack next year? Zillow says 11 cities just missed out in 2019, including the Massachusetts cities of Needham and Edgartown; Longport, New Jersey; and California cities East Pasadena, Glen Ellen, Alameda, View Park-Windsor Hills, Avila Beach, Clayton, Carmel Valley, and Dana Point.
“Five cities will lose their $1 million status in 2020, assuming their current rates of decline hold true,” Zillow said, naming Kailua, Hawaii; Milpitas, California; Harding Township, New Jersey; Daly City, California; and Fremont, California.
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