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- Home size bounced back before July and is now 2,624 square feet, down 397 square feet from the 2020 peak.
- The largest declines are found in Phoenix and Nashville.
Sales of homes costing $1 million more than doubled over the past three years, but they are getting smaller in size, according to a new analysis by Zillow.
Homes that sold at or near $1 million contracted nearly 500 square feet — from a peak of 3,021 square feet in the middle of 2020 to a valley of 2,530 square feet in early 2022, according to floor-plan data for Zillow listings. Home size bounced back before July, though, and is now 2,624 square feet, down 397 square feet from the 2020 peak.
"Buyers with seven-figure budgets shopping for homes during the pandemic were doing so coming off the longest period of economic growth in U.S. history and with the help of historically low interest rates," said Anushna Prakash, economic data analyst at Zillow. "Sales for expensive homes soared while buyers in the heat of competition accepted smaller layouts."
Zillow found that the typical home in the $1 million range shrank in nearly every major metropolitan area. The largest declines are found in Phoenix, down 1,116 square feet from 2019 to 2022, and Nashville, where these homes lost 1,019 square feet.
Floor plans grew in just two major metros: by a closet in Minneapolis (36 square feet), and by at least a room and a half in St. Louis (406). Hartford, Conn., is where $1 million goes furthest, buying 4,873 square feet, or $205 per square foot.
Overall, home sales were elevated during the pandemic, but have slowed in recent months as affordability challenges have pushed many buyers to the sidelines. The recent move of the market toward rebalancing has shifted competition away from mid- and high-tier properties and back to the most affordable homes.
Sales for homes priced at $1 million or more rose from 43,421 in the second quarter of 2019 to 90,110 in 2022, a record volume. As home values skyrocketed across the country, the share of single-family homes that sold for $1 million or more has more than doubled, moving from 2.7% in 2019 to 2.5% in 2020, to 6.4% now.
Portland led major metros in sales volume increase. The number of $1 million-plus sales there soared by 253% since mid-2019. Austin, Texas, where home values are up 71% since mid-2019, saw sales jump by 220%.
The only metro that witnessed a decline in the volume of transactions with a $1 million-plus pricetag was Boston, where the share fell by 32%. Boston and other major East Coast metros had relatively low appreciation over the past three years compared to other regions.