The number of $1 million neighborhoods in the U.S. is growing fast. In the last three years, exactly 346 neighborhoods grew to meet Zillow’s definition of the term, which stipulates that at least ten percent of its homes are worth seven figures or more.
Zillow analyzed residential ZIP codes across the country, looking for places where at least 10 percent of homes in the area are worth $1 million or more, making it a $1 Million Neighborhood. About 4 percent of all ZIP codes analyzed had enough $1 million homes to qualify. There are now a total of 1,280 $1 Million Neighborhoods in the U.S., up from 958 in 2014.
U.S. home values are at a record high as the housing market continues its recovery from the Great Recession. As a result, an increasing number of ZIP codes are finding themselves on the $1 Million Neighborhood list. West Coast metropolitan areas, where home values have bounced back fastest, saw the greatest increase in the number of $1 Million Neighborhoods over the past three years.
Nearly 74 percent of all ZIP codes in the San Francisco metropolitan area meet the $1 Million Neighborhood benchmark. One in five San Francisco ZIP codes have been added to the $1 Million Neighborhoods list since 2007. The San Francisco metropolitan area has gained 36 $1 Million Neighborhoods over the past three years, second to New York, which gained 53.
"As home values reach new peaks, $1 million homes are increasingly common, even in neighborhoods once considered middle class," said Zillow's Chief Economist Dr. Svenja Gudell. "The U.S. median home value is just over $200,000, but in San Francisco, Los Angeles and other expensive cities, homes are worth much more. As home values hit seven figures in many neighborhoods, it's going to have real impacts on affordability for middle-class homeowners whose incomes haven't kept up, and this imbalance especially has implications for people on fixed incomes whose property taxes are rising along with their home value."
Not all markets are seeing an increase in the share of $1 Million Neighborhoods. In St. Louis and Cincinnati, where the median home value is nearly $50,000 below the national median, no new $1 Million Neighborhoods were added over the past 10 years.
Las Vegas, among the hardest hit by the Great Recession, has only gained one $1 Million Neighborhood since 2014.