Number Of Homes Worth $1 Million Or More Has Doubled During Pandemic

The pandemic has scrambled the housing market by pushing would-be homeowners and renters to greater pains to find the right place to live. But with COVID-19 seemingly in retreat, the situation has not markedly improved as home prices are now higher than they were even before the pandemic.

On Monday, the real estate brokerage Redfin found that the number of homes valued at $1 million or more has effectively doubled since the pandemic began two years ago. In February 2022, the firm reported that those worth $1 million or more stood at 8.2% compared to 4.8% during the same period in 2020, one month before the pandemic began to spread widely in the U.S.

The most expensive parts of the country are concentrated in states that were already considered expensive prior to the pandemic. For example, seven of the top 10 cities with homes worth $1 million or more were in California and this trend has been concentrated in the Bay Area. In San Francisco and San Jose, the heart of Silicon Valley, Axios reported that nearly nine out of 10 properties listed were priced over $1 million.

During the COVID-19 pandemic, prices for homebuilding rose because of disruptions in the supply chain for construction materials and a labor shortage that was exacerbated by the virus’ spread. A drop in interest rates has also pushed down borrowing costs, which further increased demand for homes.

For homeowners, it is a welcome trend to see the value of their properties soar. But this has made it more challenging for those looking to own a home or rent as the affordability of existing options deteriorates.

This is especially challenging for first-time buyers and minorities, who are the ones who are squeezed the most by the current market because they often lack the means to either afford a mortgage or hold pre-existing equity that would let them purchase a home today.

Millennials, those born from 1981 to 1996, struggle more than their parents and grandparents to become homeowners. Even if there is unmet demand for homes, members of the generation are generally more pessimistic about any possibility that they will ever own one. COVID-19 has heightened this sentiment further.

Homeownership has also declined among nonwhite Americans. For example, homeownership among Black Americans has declined 5% after reaching a peak in 2004.