These Two Data Points Illustrate The Reality That America Has Two Housing Markets

A recent report from Zillow indicates that America has 550 cities with median home prices of $1 million. Yet none of those cities are on the list of Zillow's top ten hottest housing markets of 2024. That disparity paints a picture of the extent to which America has a dual-track housing market.

On one track are Americans who can afford homes in the $1-million zip codes or are locked into those zip codes on low-interest-rate mortgages. On the other track are Americans who were marginally priced out of the housing market before the pandemic and now find themselves left even further adrift by high interest rates and low availability of affordable homes. The U.S. is becoming a nation of winners and losers when it comes to real estate ownership.

Cities with average home values over $1 million are not new. The reality is that most American homebuyers never expected to live in places like Malibu, California, or Darien, Connecticut. They also never expected that buying in the relatively middle- to upper-middle-class enclaves that symbolize the American dream would come with a seven-figure price tag.  

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California leads the list, with 210 cities having million-dollar home values. Most of those cities are in metropolitan areas around Los Angeles or San Francisco, although San Diego and San Jose's metro areas are also represented. On the East Coast, the metropolitan areas of New York and Boston account for the lion's share of the million-dollar markets with Washington, D.C. and Miami, Florida making appearances.

The irony is that many of the cities that find themselves on the million-dollar list and the metropolitan areas they surround were once cities Americans migrated to so they could make it big. They are becoming cities where Americans move if only if they've already made it. A million-dollar home price is double the cost of the median home in the United States.

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Americans are responding by moving to cities with lower costs of living and more affordable homes. America's Sunbelt, which stretches from Florida to Arizona and north to the Carolinas, has been experiencing unprecedented population growth. Zillow's top 10 list of America's hottest real estate markets for 2024 shows that even cold-weather markets like Cleveland, Ohio, and Buffalo, New York, have become destination cities for Americans searching for affordable housing opportunities.

It's also worth noting that most of the cities on Zillow's top 10 hottest housing markets list have a median home price that is close to or lower than the national average. Contrast that with the fact that none of the 550 million-dollar cities made the top 10 list, and it's hard to ignore the reality that America's housing market is almost completely bifurcated.

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