Home News Million-dollar homes lose luxury status as buyers get less space

Million-dollar homes lose luxury status as buyers get less space

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A For Sale sign in front of a house listed for over $1 million in San Francisco on April 29, 2022.

Justin Sullivan | Getty Images

Grocery shoppers only A phenomenon called “shrinkflation” This happens when the price stays the same or increases as the product gets smaller.

Homebuyers should also worry about “shrinkflation.” This trend has hit homes, especially those in the million-dollar range, as the size of homes that buyers get with their money is shrinking. new research From real estate site Zillow.

That’s one way inflation is hurting the housing market, according to Zillow’s chief economist Skylar Olsen.

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Money doesn’t get very far for homes in any price range, she said. increase.

“A million dollars isn’t as fancy as it used to be,” said Olsen.

The idea that you only have $1 million to buy a typical home has been around in California for some time. More and more markets are now experiencing the same sentiment, Olsen said.

According to Zillow, the number of $1 million-plus homes sold this spring has more than doubled from two years ago. The largest increase occurred in Austin, Texas. Portland, Oregon. and Riverside, California.

But according to Zillow Listings floor plan data, million dollar homes are getting smaller. These homes peaked at 3,021 square feet in mid-2020 and declined to 2,530 earlier this year.

However, the size of the home at that price level has now risen to 2,624 square feet, still 397 square feet below its 2020 high.

Million-dollar homes have fewer bathrooms

Since 2019, the typical home selling for about $1 million has shrunk in nearly every major metropolitan area, Zillow analysis reveals. His million-dollar homes today tend to have fewer bathrooms and are generally older. report notes.

The largest decrease in home size in this price range was in Phoenix, which decreased by approximately 1,116 square feet, and in Nashville, Tennessee, which decreased by 1,019 square feet.

Only two metropolitan areas grew in size for home floor plans above $1 million during that time. This includes Minneapolis, about 36 square feet, or an increase in closet size. and St. Louis, about 406 square feet, or about 1.5 rooms.

According to Zillow, prospective homebuyers in the million dollar range could make the most money in Hartford, Connecticut, where the price per square foot is $205.

This was followed by other cities in the middle of the country, including Indianapolis, at $209 per square foot. Oklahoma City, $214. Kansas City, Missouri, $221. and Cincinnati, $222.

San Jose had the highest price per square foot of all major metro areas tracked by Zillow, at about $715. Prices for a typical single-family home in that city topped $1.5 million for him as of July.

Zillow defines a million dollar home as a single-family home sold between $950,000 and $1.05 million. Homes priced at $1 million or more, on the other hand, sold for $1 million or more. Excludes condominiums.

Impact of cooling market on shrinkflation

The recent heat of the real estate market 72% of recent homebuyers have regrets about their home purchase, according to a recent survey by smart real estate found.spending too much money is the best Common Reasons for Buyer Regretwith 30% of respondents.

However, as the market cools down, there are signs that prices will fall. 1 in 5 sellers lower their asking price According to Realtor.com, in August. This could give buyers more opportunities to shop and get the best value and square footage for their money.

Clever Real Estate economist Danetha Doe recently told CNBC, “Surround yourself with professionals who really care about your goals and dreams and are familiar with the area.

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