The Million Dollar Dilemma: Is Your Dream Home Now a Fantasy?
If you’ve been waiting for mortgage rates to take a chill pill, here’s some good news: rates are finally starting to dip. But before you get too excited, let’s dive into what that actually means for your home-buying journey—spoiler alert: it’s still pretty rough out there.
Million Dollar Homes in Orange County: The New Normal
Once upon a time, million-dollar homes were a rarity, a dream, complete with what felt like unobtainable estates, tennis courts, and infinity pools. Now, owning a million dollar home in Orange County doesn’t necessarily make you a big shot; in many areas around Orange County, it’s just the cost of entry. According to a report from the Wall Street Journal, a record 8.5% of U.S. homes are now valued at $1 million or more. That’s a big jump from 7.6% last year and more than double the 4% we saw before the pandemic hit.
What does it look like for homes in Orange County? Well as of writing this article, there are only 205 homes out of 2,065 that are priced below $1 million. That means more than 90% of single-family detached homes that are currently for sale in OC are above $1 million!!! That’s insane!
So what’s driving this surge in million-dollar homes? It all comes down to historically high home prices across the country. Redfin’s data shows that the median home sale price rose 4% year-over-year, hitting a record in June.
California: The Land of Million Dollar Homes
Ok let’s say, “Forget Orange County, but I still want a home in California.” CA leads the pack when it comes to $1 million-plus homes, and it’s not slowing down. In Riverside, for instance, a whopping 25% of homes for sale are listed for at least $1 million. In 2023, only 8.3% of homes sold for above $1 million. And if you’re looking in the San Francisco Bay Area, you might need to adjust expectations—80.6% of homes in San Francisco are now valued at $1 million or more, up from 76.4% in 2023.
Redfin economist Chen Zhao summed it up well: “Years ago, if you owned a $1 million home, you would have been considered pretty rich. Now, that’s the entry point for some markets.” In other words, what used to be considered luxury is now just the starting line.
The Reality Check: What This Means for Buyers
While rising mortgage rates have cooled demand, the housing market is still a tough place for buyers. And as rates are beginning to creep down from the highs, it’s only getting harder. A shortage of inventory is keeping prices at historic highs, making it even harder for those already struggling with affordability. And here’s the kicker: inventory is finally creeping up nationwide, but it’s still about 30% below pre-pandemic levels. Why? Sellers are holding onto their low-interest-rate mortgages, and the high costs of construction are keeping new builds at bay.
In markets like San Francisco, even having a $1 million budget might not get you a single-family home. Bay Area real estate agent Rose Hayes, who’s listing a $1.05 million two-bedroom condo, said she now assumes that any buyer with a $1 million budget is probably looking at condos. Anything priced under $1 million often comes with strings attached, like existing tenancy agreements that buyers would need to take on. As Hayes put it, “It’s so hard to find anything for under $1 million out there.”
Not All Markets Are Created Equal – Why Californians Move out of State
Of course, not every area in the U.S. are hitting these high numbers. Some cities, like Detroit, Cleveland, Pittsburgh, and Kansas City, still have less than 1% of homes valued at $1 million or more. And only one major metro area—Austin, Texas—saw a slight decline in the share of $1 million homes, dropping from 10.1% last year to 10% this year. Redfin thinks this is due to a drop of new construction homes in Texas that’s helping bring up supply.
What does this mean for you?
So, what does this all mean for you? While mortgage rates might be easing, the reality is that home prices are still high—especially in places like our hometown of OC/SoCal. Buying a home is a huge investment and a big decision. If you’re in the market for a new home, just know: $1 million is no longer a luxury price tag; it’s a new normal here. So lean on us when it comes to creating a plan to put you in a position to buy your dream home. We have methods to help you save and a tried and true plan to help get you to your ultimate goal! We’re always here for you.
