The definition of luxury is applied loosely in today's housing market and can vary based on market size and location. Using the price point of $1 million as a benchmark for luxury, Point2Homes analyzed different sized housing markets to determine how “high-end” the price point is.
As part of the analysis, Point2Homes looked at inventory in 30 large, 30 midsized, and 30 small cities to rank them according to the availability of high-end housing.
For the purposes of the analysis, large cities were defined as markets with at least 500,000 people, midsized cities were defined as areas with at least 150,000 people, and small cities were defined as areas with populations of 50,000 and up.
In large cities, elevated median prices have transformed the definition of luxury and attainable housing. While $1 million would buy the dream home of a buyer in many markets, median prices are well above the $1 million price point in the 30 large cities analyzed.
For example, the median home price in San Francisco is $1.3 million and in San Jose, California, is $1.24 million. In Los Angeles, 63.6% of homes available have prices at or above $1 million. San Francisco, San Jose, San Diego, and Boston all also have more than 50% of available inventory priced at or above $1 million.
According to Point2Homes, Los Angeles also features the highest share of “ultra-luxury” homes priced above $5 million: 11.6%. Due to high prices in large markets, the fraction of homes available for over $5 million provides a greater sense of luxury than homes available for $1 million. The share of homes for sale for over $5 million is above 7% in Boston (9.4%), San Diego (7.6%), and New York City (7.4%).
At the other end of the spectrum, Detroit; Memphis, Tennessee; and El Paso, Texas, are large cities with less than 2% of available inventory priced at or above $1 million. The median sales price in each market is below $250,000.
Among midsized markets, home prices are skewed higher in California metros, including Glendale (65.8% of inventory above $1 million), Huntington Beach (62.8% of inventory above $1 million), and Oxanrd (42.6% of inventory above $1 million). Salt Lake City; Hialeah, Florida; Spring Valley, Nevada; and Enterprise, Nevada, also have more than 10% of inventory priced at or above $1 million.
Thirteen midsized markets have “somewhat negligible” shares of luxury homes for sale, all lower than 4%, according to Point2Homes.
Point2Homes’s analysis revealed that luxury homes are not limited to large or even midsized cities. Six small cities have more than 30% of housing inventory priced at or above $1 million: East Honolulu, Hawaii; Bozeman, Montana; North Bethesda, Maryland; Cypress, California; Covina, California; and Catalina Foothills, Arizona. Conversely, seven small cities have no luxury listings on the market: Florin, California; Levittown, Pennsylvania; East Hartford, Connecticut; Troy, New York; Mishawaka, Indiana; Enid, Oklahoma; and Lakewood, Ohio.
