With pressure on the homebuilding industry to build fewer trophy homes and concentrate on filling the demand for affordable housing, the data does not bode well for builders.
Median prices of new homes have risen steadily during the recession. In September, the median sold price of a new home hit $313,500, 5.5 percent higher than last year’s median of $296,400 and 25.2 percent higher than the median price for existing homes in September.
Even so, over the past two years super expensive homes priced at one million or more are on the decline, according to data from the Census Bureau’s Survey of Construction. In 2015, a total of 1,762 homes were started for sale with a price of $1 million or more and new homes started for sale with a price of $1 million or more decreased as a share in absolute number in 2015. That number was significantly lower than in 2013 (3,347 homes) and 2014 (3,019).
In percentage terms, these expensive homes represented 1.06 percent of all new homes started for sale in 2015, from a peak of 1.26 percent in 2014 but about the same as in 2013 (0.99 percent). This represents a much higher percent share compared to other years. For instance, from 2008 to 2012 the percent share of $1 million or more homes started for sale was less than 0.50 percent, while it was at most 0.66 percent during the boom period, reported the National Association of Home Builders’ Eye on Housing blog.
To put things in perspective, Trulia reported in May that since 2012 the share of all million dollar homes in the United States has increased from 1.6 percent to 3 percent, but many metros and neighborhoods have seen a much larger increase.
Among the 100 largest metros, San Francisco has seen the largest increase in the share of million dollar homes in the country, growing to 57.4 percent in 2016 from 19.6 percent of homes in 2012. It is followed by two other Bay Area metros, No. 2 San Jose and No. 3 Oakland. Metros in Southern California, Hawaii, and the Northeast nearly doubled the share of million dollar homes in just four years.