A record 550 cities now have average home values above $1 million

A record 550 cities now have average home values above  million
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  • A record number of US cities have an average home price of more than $1 million.
  • California had the highest concentration of million-dollar-plus areas, Zillow found in a new report.
  • Experts say housing affordability could improve slightly as more supply makes its way to the market.

A record number of US cities have an average home value of more than $1 million — a sign that the housing market is becoming increasingly out-of-reach for some Americans as prices continue to soar.

The US has 550 cities where the typical home value is north of seven figures, according to a recent Zillow report. That’s the highest number of so-called “million-dollar” cities ever recorded, the real-estate-listings site said, up from 491 a year ago.

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California had the highest concentration of million-dollar cities, with 210 where the average home value exceeded $1 million. New York had 66, and New Jersey — which saw the highest increase — had 49, the report found.

Rising home prices have largely been fueled by high mortgage rates, with the 30-year fixed rate clocking in at 6.79% the last week, according to Freddie Mac.

High borrowing costs have deterred homeowners from listing their properties for sale, creating a supply-demand imbalance that caused home prices to rise at a record pace in January, per the Case-Shiller Home Price Index.

“The housing market is tight with few homes available, and competition is still high for homes. That competitive pressure is pushing home values higher across the US,” Anushna Prakash, an economic analyst at Zillow, said in a note on Tuesday.

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But there are signs that home affordability could be improving, despite economists warning that high mortgage rates are here to stay. That’s because homeowners choosing to put their properties up for sale anyway, with existing home sales jumping 9.5% in February, National Association of Realtors data shows. 

There’s also a wave of new housing supply in the works. Housing completions rose to 1.7 million in February, 15.6% higher than the increase recorded last year, according to Census surveys. 

The median US home cost $349,216 in February — already rising 4% from levels at the start of the year, according to Zillow. That exceeds the 0.9% home value growth that Zillow is expecting for the year, according to the firm’s latest forecast

Read the original article on Business Insider

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