$1M for a house? Welcome to the new normal | Fox Business
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Billy Rose on the changing definition of luxury in Los Angeles real estate<br>Billy Rose, co-founder and vice chairman of The Agency, explains how rising prices have reshaped the definition of luxury in major housing markets.
A $1 million home no longer guarantees luxury in much of the United States, as years of rising prices have pushed millions of properties into seven-figure territory.
The number of owner-occupied U.S. homes worth at least $1 million climbed from about 1.5 million in 2005 to 6.9 million in 2024, according to an analysis from the National Association of Realtors (NAR). Those homes now make up 8% of the market, up from 2% two decades ago.<br>The shift is most dramatic in high-cost markets. About 40% of owner-occupied homes in Hawaii are valued at $1 million or more, while roughly one-third of homes in California and Washington, D.C., have reached that level, the report noted.<br>By contrast, million-dollar homes account for about 1% of properties in Mississippi, North Dakota and West Virginia.
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About one-third of homes in California and Washington, D.C., are valued at $1 million or more. (Simonkr/Getty Images)
Billy Rose, founder and vice chairman of real estate brokerage The Agency, told FOX Business that the $1 million mark stopped representing true luxury in Los Angeles years ago.<br>"In L.A., it seems like there’s so much wealth here and there’s so much elevated housing that the million-dollar threshold now is truly entry," Rose said.
Some first-time buyers in the region begin their searches at around $2.5 million or $3 million, he added.<br>Buyers are also confronting stubborn prices and limited inventory in many markets. Rose said sellers remain anchored to values reached when borrowing costs were lower, while buyers are waiting for better deals.<br>"That has put kind of a staring contest between buyers and sellers," he said.
The $1 million threshold also appears to shape buyer behavior.<br>MIAMI’S TALLEST NEW TOWER NEARS SELLOUT AS PROJECT SPARKS MASSIVE WEALTH MIGRATION FOR TOP EXECUTIVES
Prospective home buyers arrive to tour a house for sale in Dunlap, Illinois, on Aug. 19, 2018. (Daniel Acker/Bloomberg via Getty Images / Getty Images)
Since 2015, about 2.4 times more homes have sold just below $1 million than just above it, according to NAR. Buyers may set searches below the round number, face different mortgage requirements or encounter taxes that begin at $1 million.
New York’s mansion tax is one example. The tax has applied to purchases of $1 million or more since 1989, even though that amount would equal about $2.7 million today after adjusting for inflation, the report noted.<br>The 1% tax adds $10,000 to the purchase of a $1 million home.<br>"I think you need to be looking at whether those thresholds need to increase and be more keeping with the times," Rose...