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FairfaxReal EstateNo surprise: $1 million buys less house than it used to

No surprise: $1 million buys less house than it used to

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What will a million smackeroos buy someone in the local region’s real-estate market? A home slightly smaller than comparable for million-dollar properties nationally.

That’s according to a new analysis from Zillow, which found that a home sold for $1 million in the Washington market contains a median 2,572 square feet, compared to 2,624 square feet as the national median.

More than twice as many $1 million-plus homes were sold nationally this spring than in the spring of 2019, according to the Zillow data, and homes that sold at or near $1 million contracted nearly 500 square feet, from a peak of 3,021 in the middle of 2020 to a valley of 2,530 in early 2022, according to floor-plan data for Zillow listings. Home size bounced back before July and is now 2,624 square feet, though still down 397 square feet from the 2020 peak.

“Buyers with seven-figure budgets shopping for homes during the pandemic were doing so coming off the longest period of economic growth in U.S. history and with the help of historically low interest rates,” said Anushna Prakash, an economic-data analyst at Zillow. “Sales for expensive homes soared, while buyers in the heat of competition accepted smaller layouts.”

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The typical home in the $1 million range shrank in nearly every major metropolitan area. The largest declines were found in Phoenix – down 1,116 square feet from 2019 to 2022 – and Nashville, where these homes lost 1,019 square feet. Floor plans grew in just two major metros: by a closet in Minneapolis (36 square feet), and by at least a room and a half in St. Louis (406).

Sales for homes priced at $1 million or more rose from 43,421 in the second quarter of 2019 to 90,110 in 2022, a new record volume. These once-rare digs also constitute a much greater portion of the total market. As home values skyrocketed across the country, the share of single-family homes that sold for $1 million or more has more than doubled, moving from 2.7 percent in 2019 to 2.5 percent in 2020 to 6.4 percent today.

Portland, Ore., led major metros in sales volume increase: The number of $1 million-plus sales soared by 253 percent since mid-2019. Austin, where home values are up 71 percent since mid-2019, saw sales jump by 220 percent. The only metro that witnessed a decline in the volume of transactions with a $1-million-plus price tag was Boston, where the share fell by 32 percent.

Boston and other major East Coast metros had relatively low appreciation over the past three years compared to other regions.

One million dollars in San Jose will buy just three bedrooms, two bathrooms and just shy of 1,400 square feet of living space – about $715 per square foot, the highest amount among major metros. By contrast, Washington-area residents buying a million-dollar home spent a median $389 for every square foot, just slightly higher than the national figure of $381.

Those looking for the most bang for their million bucks should head to Hartford, Conn., then to the Midwest. Among the 50 major metros included in the study, Hartford has the lowest price per square foot at $205, followed closely by Indianapolis, Oklahoma City, Kansas City and Cincinnati. Though options in that range are limited in these areas, it’s hard to deny the opulence afforded by the expense, with square footage upward of 4,500.

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