There Is A Sharp Decline In The Value Of Million-Dollar Homes In The Bay Area, Seattle, And New York.

According to Redfin, home prices are dropping more in big cities

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There are certain million-dollar homes that have been thrown back to earth because of the housing market rout.

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A stall in the housing market follows two years of red-hot growth. The sector is being hit hard by higher rates. Mortgage News Daily reported on Friday that the 30-year fixed interest rate was trending slightly below 7%. The higher the interest rate, the more money a buyer will have to pay in interest.

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Home sales are declining as frustrated buyers stay away. A weak demand environment is also contributing to a decline in home prices.

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As prices dropped in January, certain million-dollar homes exited the category, according to Redfin RDFN, -2.43%.

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Compared to June 2022, when there were 8.6% of homes worth at least $1 million in the U.S., 7% are worth at least $1 million now, according to the company.

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In January 2023, 6.2 million American homes will be worth more than $1 million, which is a little over 7% of all homes.

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The numbers are even falling in some parts of the country. Million-dollar homes are most likely to be lost in the Bay Area, Seattle, and New York, according to the report.

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Just over 80% of San Francisco's homes worth a million dollars were worth a million dollars this past January, down from 86.3% a year ago (January 2022). The number of million-dollar homes in Oakland dropped by 5.2%.

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New York City's home values dropped 3%, but Seattle's dropped by 3.4%.

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As part of its proprietary model, Redfin calculates the value of homes based on a Redfin Estimate, public records, and data from the multiple listing service (MLS). In addition to single-family homes, townhomes, condos, and apartments, they examined more than 99 million properties nationwide.

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Redfin's Chen Zhao warns that falling home values don't translate into a discount for buyers.

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Higher rates are balancing out the dip in prices.

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In the housing market, there are winners and losers

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It is not a good time for buyers who need a loan to buy because it will cost more per month to buy an $850,000 house today than it did a year ago," she said.

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As an example, if one buys a $1.28 million home in San Francisco, with 6.6% interest rates, they'll pay around $8,400 monthly. Due to a 3.5% interest rate, their mortgage would be only $7,100, versus $1.41 million a year ago.

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Housing is overall facing headwinds in the Bay Area.

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A median home price in San Francisco fell 9.4% year-over-year in January, while the median home price in Oakland dropped 7.8%. Redfin said the region has seen outsized drops since home prices have fallen more than in other places.

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The situation is not all gloom, however. The average price of a home in Florida is more than $1 million, according to Redfin.

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Miami has one in seven homes valued at at least $1 million, up 11.5% from a year ago.

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These categories also include North Port, Florida, Anaheim, California, Nashville, Tennessee, and West Palm Beach, Florida.

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“In many parts of Florida, home values and prices are still climbing, so million-dollar homes make up a larger chunk of Florida's housing stock," says Redfin.

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Despite the high costs of living in more expensive areas, Florida homes are holding their value due to the healthy demand from buyers.