Nestled amid the palm trees of Jupiter Island, Florida, is a three-bedroom, five-bathroom house with a pool on a half-acre lot.
The 2,798-square-foot house, only steps to the beach and offering ocean views, is currently listed on the market for $5.1 million. As of the time of publication, it's the cheapest house for sale on Jupiter Island, which boasts the highest median home value in America, according to Zillow Group Inc. (Nasdaq: ZG).
The typical home value on Jupiter Island reached $9.98 million in February 2024, according to Zillow, beating out the exclusive neighborhoods of Golden Beach, Florida; Hunts Point, Washington; and Atherton, California.
While certain cities and neighborhoods have always seen eye-popping price tags, Zillow research found the number of cities where the median home value is above $1 million has skyrocketed in recent years.
In January 2000, the number of so-called million-dollar cities was only 17. That grew to about 245 cities in February 2020, right before Covid-19 was declared a pandemic. In the four years since, that number has more than doubled, to 550, as home values skyrocketed amid a blistering market and tight inventory.
Since then, soaring values and rising interest rates have blocked many buyers and limited participation in the market, but that hasn’t meant relief in the form of prices.
"Affordability is still a big challenge for buyers, but that hasn't stopped prices from growing," said Anushna Prakash, an economic research data scientist at Zillow, in a news release. "Buyers this spring are going to see more options to choose from, but they'll also see a lot of other buyers wandering through the same open houses. Competition will stay fierce, especially for the most attractive and well-priced homes. If mortgage rates drop later this year, as many expect, we may see a surge in million-dollar cities as even more buyers jump in and drive prices higher."
Nearly half the million-dollar cities in Zillow's research are in California, at about 220, while 32 are in Florida —nearly all in the Miami or Orlando areas. New York had 66 million-dollar cities while New Jersey had 49.
Sellers are cutting home prices
Across the broader housing market, a growing share of sellers are slashing their asking prices.
Data from real estate firm Redfin Corp. found6.4% of active listings on the platform had a price drop through the week ending May 26. While that's not a massive portion of listings, the percentage is substantially higher than the 4.4% of listings with price drops recorded during the same time in 2023.It's also higher than the percentages seen at the same point in 2022 and 2021.
That includes fewer homes being sold within two weeks after being listed — down to 42.9% in the week ending May 26 from 45.7% the same time last year.
Additionally, new listings are up about 7.8% over the same time in 2023, although both figures are still below previous years' marks, according to Redfin. And yet, prices in many parts of the country continue to rise as buyers compete over the same homes.
The lack of inventory stems in part from the belief thathomeowners are "locked in" to their existing homes, driven by the extremely low interest rates on home mortgages during the height of the pandemic. The Federal Reserve began hiking rates rapidly in 2022, more than doubling mortgage interest rates. The combination of high interest rates and high prices hashelped push the median monthly housing payment to a record $2,843, according to Redfin, up 13% over the same time last year.
But there are some bright spots. Areas of Texas and Florida are among the best places for buyers, according to new research by Zillow. That's, in part, because an outsized share of new home construction is happening in Texas metro areas such as Austin and San Antonio, as well as Tampa, Orlando and Jacksonville in Florida.
"Prospective buyers in most markets today are feeling less intense competition than in recent spring shopping seasons. Pressure is easing up as mortgage rates raise costs and sellers return," saidSkylar Olsen, Zillow chief economist, in a news release. "However, the pool of homes for sale remains remarkably low. This means the nation remains a seller's market despite high mortgage rates — homes are selling faster, with more buyer interest over any one listing, than pre-pandemic."
